How to Identify Student Loan Scams

If a company wants to know your Social Security number or wants you to sign documents such as giving it power of attorney, run.

If you’ve already signed over power or something else you shouldn’t have, contact your original lender so that you, and only you, have access to your account.

Many types of student loan assistance you can do for free yourself. Some scammers target you through ads, either while you browse websites or go on platforms such as Facebook, and offer to help. However, these offers tend to be for services such as income-driven repayment that are available for you to do. You should never have to pay, and scammers spend money to advertise and “lure” victims.

Have you ever run across a deal promising something like, “Student loan forgiveness in one month—sign up today before our offer expires!”

Pressure is one tactic that scammers use. They want to rush you into making an unwise decision. They fluster you with an artificial deadline so you don’t take a close look at the company. Student loan forgiveness isn’t an overnight process.

Some scammers purport to be able to get your loans forgiven right away.

It is possible for some loans to be forgiven but in the long term. For example, if you are on an income-driven repayment plan, your loan might be forgiven after 20 years. Similarly, if you teach for five years in a low-income setting, some or all of your loans could be forgiven under the Teacher Loan Forgiveness Program.

There is no immediate loan forgiveness. Period.

The best debt relief companies may offer to negotiate lower interest rates or to even figure out loan settlements. Great!

But.

These debt relief companies should never ask you to pay money upfront or to pay them fees every month. Comparisons like National Debt Relief vs. Freedom Debt Relief will help you research the reputable companies. Alternatively, check out a counselor that the National Foundation for Credit Counseling has certified. You will likely have to pay an upfront fee anyway, but it will be much lower than a fee charged by a scammer. (Plus, you won’t be asked for your SSN or to sign over power of attorney.)

If your loan is private, see about forbearance or deferment. Otherwise, you could see if you qualify for income-driven repayment or other options at studentloans.gov. And always, always research loans first before you commit, especially if you are considering consolidating student loans with an online loan company. Your future financial self will thank you.