6 signs of a student loan scam and how to avoid them
To keep student loan scammers at arm’s length, use these tips to know if an offer is too good to be true.
College and university are pricey, and it doesn’t look like that will change any time soon. Therefore, if you’re planning on furthering your studies, chances are you’ll be looking into getting a student loan. For many, student loans are the only way to afford school.
Unfortunately, some people will take advantage of this financial need to swindle innocent students out of money. It’s essential to take your time when applying for a student loan. Furthermore, it’s necessary to do your research.
There are ways to avoid getting sucked into a student loan scam.
Here are some telltale signs of a student loan scam, so you don’t get taken advantage of.
An offer to help fill out paperwork for a fee
Student loans require a decent amount of paperwork for the application process, as well as after you’ve applied and when you’re getting ready to pay it back. It can be confusing, so you may consider seeking help to get it done correctly.
Services that offer to fill out any student loan paperwork for a fee are most likely scams. But, even if they are not a scam, there is no need to pay someone for help. Schools have financial aid offices for this exact reason.
There are people there who are trained in all aspects of student loan paperwork, and it’s their job to help you for no cost.
An offer to reduce your interest rates
Interest can pile up on your student loan if you can’t pay it off quickly.
If you find a service that says they can negotiate or lower your student loan interest rate for a fee, beware.
Companies like these aren’t allowed to charge you based on a promise to do something for you. They must lower the student loan rate, or it is a scam.
An offer to get your loans forgiven
It is rare to find a legitimate way to get your loans forgiven. Some programs exist, but they often come with work requirements or are only for a specific field. Even then, it’s not guaranteed that your entire loan will be forgiven.
When a company tells you this, it is most likely a scam if it means you, they can get your loan forgiven or even reduced. You don’t need to pay for any legitimate services that allow you to consolidate your loan or apply for forgiveness. Loan forgiveness can often be done for free with help from the government or your financial institution.
An offer that requires your personal information
If you’re pursuing a company that says they can help you manage your student loan debt in any capacity, you want to be wary if they ask you for your personal information.
This information might include banking information, your social security or social insurance number, or your address. If you’re being asked for this, chances are, this is an illegitimate company looking to steal your information.
Reputable companies or the government will not ask you to provide this information over the phone or e-mail. You’d most likely have to fill out forms if that information is needed.
An offer that requires immediate action
Whether you’re looking to get your student loan forgiven, set up a payment plan, or defer your loan payments, the process takes time.
Unfortunately, there is no immediate fix to managing your student loan debt. Any company or individual that promises you quick results is trying to scam you.
When someone is trying to rope you into a scam, they will act as soon as possible. They do not want you to gain some clarity or do any research.
An offer that states they work with the government
Unless you actively seek out assistance from your government regarding your student loan, chances are, they won’t seek you out. So when you are looking to get government assistance, be sure you are accessing reputable websites and contacting legitimate phone numbers.
A government website will have to end in .gov to be legitimate. The government also doesn’t work with outside companies to help students manage their loan debt. So if you find a company that says they work with the government or on its behalf, they aren’t legitimate.
Furthermore, before contacting any government agency by phone, do a quick Google search of the phone number to ensure it’s not linked to any known scam.
How to avoid student loan scams
As mentioned, research is key to ensuring you don’t get sucked into a scam while applying for student loans. It’s also important to note that there are proper ways to do it when paying back your student loans. Unfortunately, there aren’t any real shortcuts for having a student loan or repaying it.
However, there are ways to get help managing any part of your student loan from beginning to end.
- Your best bet is to stick with your school’s financial aid office, your financial institution, and your federal government.
- Don’t be afraid to call these places and ask questions. They help you and ensure you don’t fall into a student loan scam.
If you end up getting scammed, there are some steps to avoid any long-term damage.
- Most importantly, you want to contact your federal government and financial institution to advise them of the scam.
- Next, you also want to monitor your credit report for any suspicious activity and report it right away. It’s also a good idea to change your passwords for personal accounts just in case.
It’s sad to think that anyone would take advantage of vulnerable students needing financial assistance. However, people who prey on the vulnerable do exist, but you can avoid these student loan scams with these tips to set yourself up for success.