Right now there’s over $1.5 trillion in student loan debt. With billions of dollars being loaned to students annually , there’s little question that there are scammers trying to urge your money that are offering services that they are doing not follow through on, or haven’t any real idea about.
In fact, the buyer Finance Protection Bureau (CFPB) has even issued multiple warnings about what to seem out for when it involves getting help together with your student loans. (For example, this one and this one).
Here are some common scams that are happening immediately that you simply should remember of when trying to find student loan help.
This article is pretty long – we cover tons of ground here. If you are looking at a selected company, jump to our section on “Is There Any Company you’ll Trust to assist You”. Before we dive into differing types of student loan scams, it’s important that we mention getting help for your student loan debt.
There are tons of companies that publicize that they will assist you together with your loans – you would possibly see the ads on Facebook, on Google, or maybe within the mail (yes, people still get mail). And these companies might promise you things or advertise some sort of help for your student loan debt which could entice you to call or check in .
Before you’re taking any action with these companies, remember this: you don’t ever need to pay someone to urge help together with your Federal student loans if you don’t want to. Not that assistance is not available, but it’s up to you to make a decision if you would like to try to to it on your own, or hire knowledgeable organization to handle it for you.
How To Spot Student Loan Scams in 2021
When you’re in a lot of debt, there’ll be people who will try to take advantage of you. These fraudsters charge you thousands of dollars with a promise of lowering your student loan payments and student debt forgiveness. The student loan scams have cost borrowers over $95 million, according to the Federal Trade Commission (FTC). But that’s about to change for good!
On December 7, 2020, the House and the Senate passed a bipartisan bill. In that bill, anyone who gains unauthorized access to the U.S. Education Department’s information technology systems for “commercial advantage” or personal gain commits a federal crime.
Scammers can be fined a maximum of $20,000, serve in prison for five years, or both. The bill is called the “Stop Student Debt Relief Scams Act.” It’s set to increase exit counseling requirements for universities and colleges that take part in the federal student aid programs.
Exit Counseling Plan To Curb Student Loan Scams
The purpose of the exit counseling is to decrease student loan scams substantially by warning students about the fraudulent student debt relief agencies. (By the way, not all student debt relief companies are frauds. We’ll explore more below.)
According to the law, the Education Department would have to prevent thieves and hackers from accessing their database. And also to warn students if they notice anything suspicious with their accounts.
The COVID-19 student loan forbearance ends on the last day of the month, January 31, 2021. It’s expected that more fraudulent companies will try to prey on desperate student loan borrowers. So beware!
Why You Should Be Alert About Student Loan Scams
We are yet to see if the Stop Student Debt Relief Scams Act will become law. But even if it doesn’t, you should watch out for student loan scams, both old and new.
Most of the worst scammers have been laying low since the federal government paused the interest and payments on federal student loans. But you can be assured that they will spring up again after it ends on January 31, 2021.
To avoid being a victim, you need to follow the advice the U.S. Department of Education gives. According to them, you don’t have to pay for assistance when it comes to your federal student loans or financial aid. Unfortunately, numerous companies pretend as debt relief institutions that can offer a quick way out of debt.
Usually, these companies ask for $1,000 or more before helping you. Meanwhile, you can get that same service for free at the U.S. Department of Education. When you agree, they sometimes steal your personal information or personal identity.
You can most easily spot scammers because they tend to make outrageous claims. But it can be beneficial when you know what to watch out for. These fraudulent companies might say you have to make payments now for their service, or you’ll lose the chance altogether.
Some even might assure you that you’ll get more financial aid, which is so not true. A third-party company can’t pull that off. Some companies are also more interested in acquiring your personal information instead of assisting you with your student loan debt.
Here’s an example. The scammers can promise to decrease your loan debt or help you become eligible for more financial aid. However, you have to give them your credit card number or bank account information for that to happen.
That said, you can be sure that you’re working with a fraudulent firm if any of the following happens:
Make An Advanced Payment
The company asks you to make an upfront payment or monthly fees before they can help. It’s a crime to ask for upfront fees before they can help you get rid of your debt. If a firm asks you to pay anything, that should be your cue.
There are numerous student loan scams out there because filling out the necessary paperwork can be time-consuming and complicated. But if you acquire the right information, you’ll know how to get the government to help you for free without losing money to scammers.
Fortunately, the federal government will make student loan scams a federal crime, which will reduce the number of scammers in the country. But you can’t wait for that to happen before you take action on your student debt. Follow the steps we’ve provided in this article, and you’ll tackle your debts without losing thousands of dollars to scammers.
However, you may not have the time to take over your student loan debts for various reasons. That’s why we recommend legitimate student debt relief agencies. These firms can help you get rid of your student loans the legal way. You can contact us at 800-820-8128, and we’ll assist you with your student loans.