What Are Student Loan Scams?
Student Loan Scams are the scams in which scammers target unsuspecting students and recent graduates through several loan schemes. The loan schemes could include promises of lower interest rates, lowering total payoff amounts, and even complete forgiveness of the entire loan.
There have been scams that targeted homeowners with promises of relief from their home mortgages. Now, the scammers are targeting students burdened with education loans.
How These Scams Work?
Students taking loans for education is a very common thing these days. This makes committing Student Loan Scams a lot easier. Therefore, students are a very common target of scammers.
There are many programs available for renegotiating your loan amount, forgiving educational loans, etc. This makes the scam even more believable.
Student Loan Scams target students troubled with education loans. They attract the students through their scam programs which include lower interest rates, forgiveness of loans, etc. Falling for these scams not only result in losing your money, but it could end up in losing your identity also. Yes, scammers could steal all your personal identifiable information in this process.
When you provide large amounts of sensitive personal data for processing any loan application, then it can make you vulnerable to identity theft, if your information falls into wrong hands.
Types of Student Loan Scams
There are various types of Student Loan Scams. The most common scams prevalent these days are listed below:
- Advanced Fee Scam
In this scam, a fake student loan company promises you to provide the best interest rates and loan terms. However, they ask for a small fee in return. The fee can be between 1% and 5% of the loan amount. This offer is a complete scam. Under no circumstances, you have to pay money to get money.
- Loan Consolidation Scam
Consolidation scam is one in which the company charges a consolidation fee. However, the company does nothing to consolidate your loan. If you are considering consolidation, make sure you do proper research on this.
- Law Firm Lawsuit Student Loan Scam
This is a scam in which a law firm claims to settle your student loan debt. In most cases, the student is referred to the law firm by a student aid company. This company promises that this law firm can settle your student loan debt for much less than you actually owe.
- Student Loan Debt Elimination Scam
The most important thing about student loan is that it must always be repaid. It cannot be eradicated unless you have a federally qualifying reason. If you find any company that promises to eliminate your student loan, beware! It is definitely a scam.
Take the following measures to avoid such scams:
- Read up on how you can reduce your loan payments on your own.
- Empower yourself by knowing your rights and options on student loans.
- Keep in mind, the following golden rule: “If it’s too good to be true, it probably is.”
- Call the three major credit bureaus- Equifax, Experian, and TransUnion to report fraud. Also, put a freeze on your credit.
- If you provided your FSA ID to the fake loan company, contact the Office of the Inspector General. They will provide you the best solution.
- Reporting the fraud company to the Consumer Financial Protection Bureau through their online complaint site or by calling 855-411-2372.
- If the scam involves an advance fee, contact your bank or credit card company to stop the payment.