4. The sales staff seem pushy
If you’ve ever been told that you need to sign something right away without first reviewing a contract or request, you should be on the defensive. For one thing, you are unlikely to find “deals” on student loan assistance programs. If you browse student loan refinance options, you might qualify for the lowest interest rate, which has nothing to do with a limited time offer and everything to do with your great credit rating.
5. They claim to be linked to the government
The only company that handles your student loan is your student loan manager. The federal government contracts with these companies, like Navient FedLoan Servicing, but they do not work with other companies to handle the pardon or remedy.
Be careful with scammers who use federal government language and logos. If you are unsure if there is a legitimate affiliation, contact your loan officer or the US Department of Education for the truth.
5 student loan scams to avoid
The good news, if there is any, is that most student loan and student loan forgiveness scams fall into a few recognizable buckets. The top student loan scams to avoid include:
- Student Loan Consolidation Scams. You can consolidate your loans with the federal government for free. If a business charges you money to consolidate your loans, that’s not a real program.
- Student Debt Elimination Scams. The only way to get rid of your debt is to pay it off yourself – or qualify for forgiveness through your repayment plan or by meeting certain eligibility criteria. Beware of a company that promises quick debt relief through forgiveness or other means.
- Advance fee scams. This is when a business charges an upfront fee to refinance your loan. You shouldn’t pay a company to refinance your loan before it is refinanced. If there are any fees, like a loan origination fee, they are usually built into your loan payments after you apply and have been approved.
- Legal scams. Many large student loan administrators have millions of clients and sometimes various pending or recently settled lawsuits. Navient, for example, has 10 million customers. If a business contacts you about a recent lawsuit through a major loan manager and asks for a promising fee waiver, it’s not real.
- Student loan forgiveness scams. It could be a standalone scam or related to another list above. Only the Department of Education offers forgiveness programs to federal student loan borrowers. If a business asks for your forgiveness, beware. The forgiveness of private student loans is extremely rare, so you shouldn’t let a company convince you otherwise.