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    How to Spot Student Loan Forgiveness Scams

    By Kayla Korzekwinski

    Kayla Korzekwinski is a Scholarships360 content writer. She earned her BA from the University of North Carolina at Chapel Hill, where she studied Advertising/PR, Rhetorical Communication, and Anthropology. Kayla has worked on communications for non-profits and student organizations. She loves to write and come up with new ways to express ideas.

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    Edited by Maria Geiger

    Maria Geiger is Director of Content at Scholarships360. She is a former online educational technology instructor and adjunct writing instructor. In addition to education reform, Maria’s interests include viewpoint diversity, blended/flipped learning, digital communication, and integrating media/web tools into the curriculum to better facilitate student engagement. Maria earned both a B.A. and an M.A. in English Literature from Monmouth University, an M. Ed. in Education from Monmouth University, and a Virtual Online Teaching Certificate (VOLT) from the University of Pennsylvania.

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    Updated: April 10th, 2024
    How to Spot Student Loan Forgiveness Scams

    As student loan debt across the nation increases, so do student loan scams. Many fraudulent companies prey upon borrowers who are struggling to repay their student loans. Getting caught in a student loan scam costs money and puts you at risk of losing access to your accounts. Fortunately, there are several telltale signs of a student loan scam. Continue reading to learn them!

    Related: Student loan default: what it is and how to avoid it

    Requests for payment upfront

    The first red flag of student loan scams is a request for payment upfront. There is nothing that a debt company can do that you can’t do on your own for free. For example, a student loan scam may claim that, for a fee, it can lower your monthly payments. This is something you can do for free with federal loans by going online and changing your repayment plan. Contact your loan servicer to discuss your loan repayment options for free. Never pay for advice about your student loans–your loan servicer will give you guidance for free.

    See also: How long does it take to pay off student loans?

    Here are all the services that the Department of Education performs on federal loans for free:

    • Lower monthly payments
    • Change your repayment plan
    • Consolidate loans
    • Postpone monthly payments through deferment or forbearance
    • Check if you qualify for loan forgiveness
    • Get loans out of default

    You should not pay another company for any of these services. 

    Additionally, you should not pay for assistance with the FAFSA. Your school’s financial aid office and the Department of Education’s FAFSA assistance page offers free FAFSA advice. The DOE also has a free contact center for advice related to the FAFSA and other federal student loan issues.

    See also: Scholarships360’s FAFSA 101 Guide

    Know the reasons for legitimate loan forgiveness

    Loan forgiveness is talked about often – and for good reason. It’s an enticing possibility that could change people’s financial lives dramatically. But before you get too excited, make sure to become familiar with the situations that actually allow for loan forgiveness. One of the most common is Public Service Loan Forgiveness. This is a great program, but has strict requirements, and if you don’t meet them, there is not much wiggle room. Make sure to find out the details straight from the source rather than trusting the word of a stranger on the phone.

    The government also has a history of forgiving loans under special circumstances. These include disabilities which prevent the borrower from working, or lawsuits which determine that a school scammed its students. These situations are harder to discern from scams. Do not share your personal information or send payments to anyone who reaches out to you with an offer to help you with loan forgiveness in this manner. While they are legitimate ways of getting your loans forgiven, you should find agencies yourself and reach out to them.

    Related: Who is eligible for Biden student loan forgiveness?

    Requests for sensitive information

    A legitimate federal or private loan company will never ask for personal information. Nor will a legitimate debt assistance company like the National Foundation for Credit Counseling (NFCC).  Scammers may ask for information such as your FSA ID login, credit card number, or your social security number. This information could be used by illegitimate companies to login to your student loan account and make decisions without your permission.

    If you have already shared your FSA ID password with a company, be sure to change it as soon as possible. You can also contact the servicer of your federal or private loans to regain access to your account.

    A fraudulent company may also ask you to sign over power of attorney so that it can make decisions and communicate with lenders on your behalf. A legitimate debt assistance company would not ask you to do this. Giving a fraudulent company access to your student loan account may cause you to lose your own access. 

    A representative uses pressure tactics

    Fraudulent companies may contact you through phone calls or emails. The content of these communications may include pressure tactics or limited time frames. The Department of Education provides examples of pressure tactics student loan scammers use, such as “act immediately to qualify for student loan forgiveness before the program is discontinued.” Other pressure tactics include requesting immediate payment for services. 

    Legitimate companies will not contact you in such ways. Remember, you always have time to make careful and knowledgeable decisions about your student loans.

    Another thing to look out for in communications from a fraudulent company is spelling and grammatical errors. If there are many cases of improper grammar or incorrect capitalization, it’s likely that the communication is coming from a scam.  

    The company promises immediate loan forgiveness

    There are no programs that can offer immediate student loan forgiveness. Any company that promises immediate student loan forgiveness, especially if it’s in exchange for money, is a scam. 

    There are legitimate ways to earn student loan forgiveness through federal programs. Students can earn loan forgiveness through Public Service Loan Forgiveness or through an income-driven repayment plan. However, these programs take 10 – 25 years to earn forgiveness.

    See also: Guide to student loan forgiveness programs 

    The company advertises on social media or search engines

    Be wary of any debt assistance company that advertises on social media or search engines. Advertisements often mean that the company is in the business for profit. Some advertisements for these companies may ask you to input personal information such as your email or phone number. Beware: these ads might be used to gather and sell this information to other scam companies. 

    Also read: How to get student loans deferred

    Avoid student loan scams!

    Overall, be sure to do your research on a company before paying for services or even discussing your situation. Ask yourself if the services offered can be done on your own, or if they’re worth paying for. Remember to do your research and know your options, and you will find the assistance that you need!

    Learn more: Do student loans affect credit?

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