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How to spot a student loan scam

Author: Financial Success | Image: Financial Success

With all the robo calls and suspicious emails, how can you know for sure that you are being contacted by a scammer? Student loan scams are becoming more widespread and we don’t want you to fall victim. In general, you should never pay for help with your student loans. Free assistance with managing your loans is provided by your federal loan servicer. However, some private companies provide (or claim to provide) student loan management services for a fee. Often these companies are not reputable and are working to scam you out of your hard earned money. Here’s how you can spot a student loan scam!

1) They request an upfront fee or charge for their services. This is red flag number one. Many of these fraudulent companies promise that they can save you money on your student loans but you must pay a fee to “activate” their services. Do not give your bank account information over the phone or through email! Free assistance is available through your federal loan servicer if you need reputable information on managing your student loan debt. We can also help you disseminate whether a company is scamming you, AND we can help give you some student loan debt saving tips! For. Free.

2) They promise loan forgiveness or loan cancellation. This is red flag numero dos. Basically, if it sounds too good to be true –it probably is. There are two federal programs for loan forgiveness, including Teacher Loan Forgiveness and Public Service Loan Forgiveness. You will work with your servicer on becoming eligible for these programs, and not a third party. Loan cancellation is very rare with federal student loans. Ultimately, unless you die or become permanently disabled, your loans will never be cancelled. We’re sorry to be blunt, but these are the facts. More information on that.

3) They ask for your personal information. This ties back to the golden rule of identity theft prevention. Never give out personal information over the phone or through email. The Department of Education or your loan servicer will never call you and demand your FSA ID and password, just like the IRS will never call you to ask for your social security number. These scammers are successful because they can get personal information from consumers very quickly over the phone. These are phishing scams and it’s best to not take the bait!

Think you’ve already been a victim of a student loan scam? Act quickly. You may report this fraudulent activity online via The Federal Trade Commission (FTC). They have already taken legal action against many student loan debt relief companies. If you’ve already given out your information, be sure to change your account log in credentials, contact your servicer to revoke access to any third party agreement that may already be on file, and contact your bank to stop payments if they are being withdrawn. 

If you need assistance with any of the above information, let us know! We can help you identify the loan scammers, and let you know who you can trust.