The Growing Problem of Student Loan Cons
Are you struggling to pay off your student loans? You’re not alone. Student loan debt has reached an all-time high, with more than 44 million borrowers owing a total of $1.6 trillion in student loans.
Unfortunately, as the problem of student loan debt has grown, so has the problem of student loan cons. Scammers are taking advantage of vulnerable borrowers, offering loan forgiveness or debt relief services that are too good to be true.
In this article, we’ll explore the various student loan cons and how to avoid falling victim to them.
The Most Common Student Loan Cons
Student loan cons can take many forms, but they all have one thing in common: they prey on borrowers who are struggling to repay their student loans. Here are some of the most common student loan cons:
Con |
Description |
How it Works |
|---|---|---|
Loan Forgiveness Scams |
Scammers promise to help borrowers qualify for loan forgiveness programs that don’t actually exist. |
The borrower is required to pay an upfront fee for the service, but the scammers never deliver on their promise. |
Debt Relief Scams |
Scammers offer to consolidate the borrower’s loans or negotiate a lower interest rate. |
The borrower is required to pay an upfront fee for the service, but the scammers never deliver on their promise. |
Loan Consolidation Scams |
Scammers offer to consolidate the borrower’s loans into one easy payment. |
The borrower is required to pay an upfront fee for the service, but the scammers never actually consolidate the loans. |
Default Resolution Scams |
Scammers offer to help borrowers who have defaulted on their loans get back on track. |
The borrower is required to pay an upfront fee for the service, but the scammers never actually help the borrower resolve the default. |
How to Avoid Student Loan Cons
The best way to avoid student loan cons is to be informed and vigilant. Here are some tips to help you avoid falling victim to a student loan con:
1. Do your research
Before working with any company that offers student loan debt relief services, do your research. Check their credentials, read reviews, and make sure they are a legitimate company.
2. Watch out for red flags
If a company guarantees that they can get your loans forgiven or offers to lower your interest rate for a fee, it’s probably a scam. Legitimate loan forgiveness programs and loan consolidation services are available through the Department of Education for free.
3. Don’t pay upfront fees
If a company requires an upfront fee for their services, it’s probably a scam. Legitimate loan forgiveness and loan consolidation services do not require upfront fees.
4. Be suspicious of unsolicited offers
If you receive an unsolicited email or phone call offering help with your student loans, be suspicious. Legitimate companies do not reach out to borrowers unsolicited.
5. Keep your personal information private
Never give your personal information, such as your social security number or bank account information, to a company that you do not trust.
6. Report suspected scams
If you suspect that you have been the victim of a student loan con, report it to the Federal Trade Commission (FTC) and your state attorney general’s office.
FAQs
1. What should I do if I think I’ve been the victim of a student loan con?
If you think you have been the victim of a student loan con, report it to the Federal Trade Commission (FTC) and your state attorney general’s office.
2. Can a student loan con affect my credit score?
Yes, if you fall victim to a student loan con and stop making payments on your loans, it can negatively affect your credit score.
3. What is loan consolidation?
Loan consolidation is the process of combining multiple loans into one loan. This can make it easier to manage your payments and may even result in a lower interest rate.
4. How do I consolidate my loans?
You can consolidate your loans through the Department of Education’s Direct Consolidation Loan program.
5. What is loan forgiveness?
Loan forgiveness is when part or all of your student loans are forgiven, meaning you no longer have to repay them.
6. Can I qualify for loan forgiveness?
Possibly. There are loan forgiveness programs available for certain professions, such as teachers and nurses, as well as for those who work in the public sector. Visit the Department of Education’s website to see if you qualify.
7. What should I do if I’m having trouble repaying my loans?
If you’re having trouble repaying your loans, contact your loan servicer immediately. They may be able to offer you options such as income-driven repayment plans or deferment.
8. Are there any legitimate debt relief companies?
Yes, there are legitimate debt relief companies. Just be sure to do your research and make sure the company is legitimate before working with them.
9. Are there any legitimate loan consolidation companies?
Yes, there are legitimate loan consolidation companies. Just be sure to do your research and make sure the company is legitimate before working with them.
10. What should I do if I receive an unsolicited offer to help with my loans?
If you receive an unsolicited offer to help with your loans, be suspicious. Legitimate companies do not reach out to borrowers unsolicited.
11. Can loan forgiveness scams be reported?
Yes, if you suspect you have been the victim of a loan forgiveness scam, report it to the Federal Trade Commission (FTC) and your state attorney general’s office.
12. Can debt relief scams be reported?
Yes, if you suspect you have been the victim of a debt relief scam, report it to the Federal Trade Commission (FTC) and your state attorney general’s office.
13. Can loan consolidation scams be reported?
Yes, if you suspect you have been the victim of a loan consolidation scam, report it to the Federal Trade Commission (FTC) and your state attorney general’s office.
Take Action Today
If you’re struggling to repay your student loans, don’t fall victim to a student loan con. Be informed, be vigilant, and remember that legitimate loan forgiveness and loan consolidation services are available for free through the Department of Education.
If you suspect that you have been the victim of a student loan con, report it to the Federal Trade Commission (FTC) and your state attorney general’s office.
Closing Disclaimer
The information contained in this article is for informational purposes only and does not constitute legal or financial advice. We do not guarantee the accuracy, completeness, or usefulness of any information presented in this article. You should consult with a qualified professional before making any financial decisions.