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When the company is soliciting the ‘best’ interest rates and loan terms for only a small upfront fee, this is a scam. They will try to charge you from 1 to 5 percent of the loan value as the fee. It is the old adage of ‘pay money to get money’. Any time you see something like this it is a valid reason to be cautious.

Legitimate student loans do not require any fees up front. If there are any fees, they are deducted from the disbursement check or they are included in the repayment amount and are amortized over the repayment period.

There are two common fees that will be paid with the loan, but once again, never up front. Federal student loans charge a 1% default fee, but charge no origination fees. Most private loans charge some type of either disbursement fee or origination fee, but these are usually negotiable and vary widely from lender to lender.

Another common student loan consolidation scam is when the company charges a consolidation fee, but doesn’t provide the services or results afterwards. The fee is sometimes called processing fees, administrative fees, or consolidation fees, and it is a lie.

Try out Sofi . It is a comparison tool that allows you to fill out one form and see personalized offers from multiple lenders in the space. Going through any lender that Sofi selects for you is NOT a scam.

There is no such thing as a free lunch. Student loan debt is far from being forgiven completely. Even with the Obama forgiveness program, there are still some pretty cut and dry requirements. If a company is telling you they can eliminate all your student loan debt, it is a scam.

Student loan debt has to be repaid - it cannot be eliminated unless you have federally qualifying reasons such as death, permanent disability, or school closure.

If a company asks you for your FAFSA Pin and your logon information for your school financial account, this is a scam. Your FAFSA Pin is your electronic signature. Also beware of companies telling you to obtain a ‘power of attorney’ for your records and finances. This has happened, and very recently. The stakes on how far companies will go to make a dollar is getting higher and higher. Your FAFSA Pin is a unique ID, by handing it over you are giving power to perform actions on your student loan accounts.

Claiming to be a “consultation service,” a lot of scam-companies will imply to consumers that it is affiliated with the Department of Education. The company uses a logo that resembles a government seal, stamps “Official Business” on its mail to consumers, and cites federal law prohibiting mail tampering to create the impression that the marketing material is sent or endorsed by the federal government. Just as well, they also might try to sell themselves off as ‘counselors’ or ‘consultation advisors’. No. This is a scam. It is part of the allure to get you to feel more safe and supported.

Another big scam by student loan consolidation companies is the ‘selling of information’. This is when companies charge customers for government services that are already free. They fail to disclose that this is something you could do yourself.