In recent years there has been an uptick in student loan assistance scams. These unscrupulous companies target struggling borrowers who are looking for relief in paying back their student loans. Instead of helping, however, these scamsters cost victims thousands of dollars and set them further behind in their goal of financial stability.
To avoid falling prey to student loan scammers, it is important to recognize the top lies told by student loan assistance scamsters. Once you know the lies they use, you can easily recognize when you are being targeted and avoid the scam. It is also helpful to learn how to identify trustworthy repayment options and where to report scammers when they attack.
Top 5 Lies Used By Student Loan Scammers
Student loan scamsters use the same few lies to repeatedly target their victims and wreak financial havoc. These are the top five lies that you can expect to hear from scam student loan repayment companies.
Your Loan Will Be Forgiven
The promise of immediate loan forgiveness is a red flag when it comes to identifying a scammy student loan company. Scamsters use this insidious lie to make you believe that you will be relieved of your financial burden if you sign up for their services. The promise of quick student loan debt relief is tempting, and it is understandable why so many people fall for the lie.
These companies typically offer to cancel your loan within hours of receiving a fee payment. Unfortunately, this promise is a complete falsehood, and any company that offers such services should not be trusted.
Student loan forgiveness programs do exist, but only through the U.S. Department of Education. To qualify for forgiveness, you must meet specific criteria and apply through their website. This process takes several weeks to complete and does not always end with full loan cancellation.
They Can Help for a Small, Upfront Fee
Student debt relief companies often promise to help you pay down your student loan balance by consolidating your debts into one low monthly payment. While this practice isn’t technically illegal, it isn’t necessary.
Federal student loan servicers encourage student loan borrowers to reach out and explore repayment plans. Legitimate lenders like T&I Credit Union offer reasonable debt consolidation options to borrowers who are struggling. While these services are offered free of charge with legitimate student loan lenders, scamster companies try to sell you the service for a few thousand dollars.
The biggest lie the scammers tell is the illegal promise to help you reorganize your student loan debt for an upfront fee. If a company asks you to pay a fee upfront before they consolidate your debt, they are breaking the law and should be reported. This is one of the most common student loan scam lies, so take care to avoid these companies and speak directly to your loan servicer.
They Need Your Personal Information and Password
A normal part of the loan application process involves creating online accounts with a username and password. If you apply for federal loans through the Free Application for Federal Student Aid (FAFSA), you use a personalized FSA ID and password that keeps your account safe and accessible only by you. Student loan repayment scammers use this information against you.
When a scammer contacts you about your student loans, they may tell you that they need your username and password to access your accounts to help you with your payments. It seems reasonable that a financial company would need your personal information, especially since you have already shared things like your social security number, address, and birthdate with your lender.
If a company says they can’t help you without your login information, they are lying and trying to access your accounts. Once they gain access, they have control of your account and can make changes as they please. Your FSA ID is considered a legal signature for loan documents, and allowing someone else to use it can lead to severe financial repercussions and identity theft. A reputable lender will never ask you for your federal login information. It is extremely important never to give anyone your FAFSA ID or password, no matter what they claim.
You Need to Act Fast, or You’ll Lose Out
One of the easiest lies to spot when it comes to identifying a student loan payment scammer is the pushy sales tactics they use to bully you into signing up for their services. A popular tactic that a scamster will use is to tell you that if you don’t act quickly and sign up right away, you’ll lose out on a lower interest rate or smaller monthly payment amount. This is meant to rush you into signing papers without fully thinking through your decision for fear of missing out on what the scammer promises you is a good deal that will help you repay your loans.
Any time you feel pressured, bullied, or rushed, you are dealing with a repayment scammer. If you feel like they are trying to convince you to sign up for their service, it is a scam, or at the very least, one of the unnecessary consolidation companies. Legitimate loan servicers and their representatives don’t advertise, and they don’t push you into signing anything.
In fact, the opposite is true for federal student loan payment programs. These representatives will give you factual information about repaying your loan, but they will never rush you or push a specific option. You may receive messages through secure channels to remind you of recertification deadlines or payment due dates, but you won’t feel like you are being sold a product.
They Have a “Success Rate” or “Proven Track Record”
If a student loan repayment company states in an advertisement or during a phone call that they have a “success rate” or “proven track record” in helping customers pay down their student loan debt, you are talking to a scammer. Just as a scam company will try to rush you into signing up for their service, they will also try to convince you using testimonials or data that proves their success.
The bottom line is that neither the federal government nor a trustworthy, established financial institution like T&I Credit Union is going to try and convince you that their repayment options are successful.
These institutions want you to be successful in the repayment of your loan and offer you options to do so, but they aren’t trying to sell you a product that you need to be convinced works. The scammers’ sole purpose is to take your money, not help you stabilize your finances; therefore, they have to convince you that their service works better than others.
How to Report Student Loan Repayment Scammers
If a student loan scam company has targeted you, report the suspicious activity as soon as possible. This keeps you protected and helps prevent others from being victimized by these dishonest scammers.
Reach out to the Federal Trade Commission, The Consumer Financial Protection Bureau, and your State Attorney General’s Office to file a complaint about the unscrupulous company that targeted you. It is vital to report these scams so that consumers are protected from further predatory action.
If you have already been scammed, make sure to change your FSA ID and password and speak to your loan servicer or financial institution about the situation. Put a hold on any payments you authorized to the scam company. Then, file a complaint with the appropriate entities.
Legitimate Student Loan Repayment Options
If you are looking for help to repay your student loans, many legitimate options can help.
Private Lenders
Most private student loan lenders offer options to repay your loan. If you cannot make the minimum payment, contact your private lender and explain your situation. Ask if they can work with you to lower your monthly payment so that you can get control of your financial situation.
Financial Institutions
Financial institutions offer many options that can assist you in your student loan repayment. T&I Credit Union offers credit cards and debt consolidation options which not only help you lower your monthly payments but may also help you build your credit as you pay down your student loan.
Federal Loan Servicers
Federal student loan borrowers are given many options when it comes to repayment. Many people opt for their income-driven repayment plans, which base your monthly payment on a percentage of your income so that you never pay more than you can realistically afford. To take advantage of these programs, contact your federal student loan servicer.
Get Your Student Loan Payments Back on Track
Reach out to a Loan Officer at T&I Credit Union today to discuss your options to repay your private student loans. Call (248) 397-9456 today to discuss our debt consolidation, credit card, and private loan options that can put you back on track with your student loan payments.
