Student loan debt is a national tragedy. It is like a financial black hole with few solutions. To add insult to injury, devious little start-up student loan companies are popping up everywhere. Like any good opportunist, they are very convincing when it comes to ripping your personal information and dollars away from you. We don’t want you to fall into the wolves’ mouth, so we are laying out in ink the top 10 student loan scams. Remember, if you have a bad feeling about a potential lender, your gut instinct is probably right so move on quick!
1. Companies making big promises of student debt relief
If they tell you that they can get all your student loan debt forgiven, or any other ‘too good to be true’ scenario, this company is positioning itself to set you up. It is overwhelming enough to have mass amounts of student loan debt to deal with, only to have sharks circle around for whatever you have left.
2. Companies charging ‘customers’ for government services that are already free
This happens all the time. It is an age old scam which began a long time ago online with the advertising of booklets on how to get ‘free government money’. Selling information once ruled the internet; hopefully we are a lot wiser these days. They will fail to inform you that this is something you could do yourself without paying tens of thousands of dollars.
3. Student loan assistance companies asking for your FAFSA PIN
In a real-life example, one student willingly gave out not only her FAFSA Pin, but her social security number, bank account information, student logon information, and all other digits. To top it off, she also signed a power of attorney to such and such company. Nervously, after canceling everything, she still waits for the financial landslide. Remember, your FAFSA Pin is your electronic signature. Always be wary of giving out any personal information.
4. Con artists asking for upfront payment of fees for services
Scandalous student loan companies are targeting only individuals who are struggling to pay their student loans via phone calls, email and social media posts. They want those dollars, but have no services to follow through. The company essentially disappears. Believe it or not, one of these programs was even sold by an IRS approved non-profit charity that targets military members.
5. Beware of automated voice messages and pop up ads
Just as it is written, beware of ‘click’ ads making those promises; they know what they are doing when it comes to stealing student dollars. Their resume has listed the experience. And just because the phone call sound authoritative does not mean it is. Be cautious.
6. Student loan assistant companies declaring they are ‘counselors’
How many times have you seen this on the internet? If you haven’t yet, then pay attention. Some of these companies create a pretty little visual of an actual counselor standing by to be your grand support system. Do you really believe counselors are like hotline operators waiting to talk you down from taking out one more loan?
7. Falsely claimed quick relief from default or garnishment
One such company of glorious so-called ‘counselors’ was College Education Services’ telemarketers who promised consumers that they would solve all the student loan issues that plagued consumers. Their internet services’ ad said, “Cut Your Student Loan Monthly Payment Up to 50% – Save Today!” Of course, they failed in delivering those promised results. In actuality, College Education Services purposely selected monthly repayment plans that increased borrower’s monthly payments.
8. Falsely representing an affiliation with the U.S. Department of Education:
Another great example of a scam service is a company called Student Loan Processing US. They flaunted themselves as a “consultation service” and bragged to consumers of their affiliation with the Department of Education. This particular company uses a logo that resembles a government seal, stamps “Official Business” on its mail to consumers, and cites federal law prohibiting mail tampering. This is a notorious scam plot. How many people freaked out when “Robert Mueller from the FBI” hit their emails? Looking as ’the law’ will never tire, so it is best to be up on this scam.
9. Deceiving borrowers about the costs and terms of its services:
Again, Student Loan Processing US failed. Not exactly lying, but lying by omission. They failed to disclose its monthly fee of $39 dollars to consumers. This is how these companies make their money, that sweet $39 dollars can add up fast.
10. Falsely promised lower payments:
They will advertise individualized payment plans created within your budget. The only thing individual about it is them sizing each person up to see how much they can shake you for. In fact, they will pursue the highest repayment plan possible. These companies mean to suck you down further into financial debt.
If you have fell prey to any student loan companies scams, you can file a complaint. Find more information at: www.consumerfinance.gov/students