What are the signs of fraudulent student loan assistance programs?
Learn to identify the signs of fraudulent student loan assistance programs and protect yourself from scams targeting individuals seeking financial aid.
Fraudulent student loan assistance programs prey on vulnerable individuals seeking relief from their student loan debt. Recognizing the signs of such scams can help you avoid falling victim to them. Here are some common signs of fraudulent student loan assistance programs:
Upfront Fees: Legitimate student loan assistance programs do not charge upfront fees. Be cautious if a company or organization asks for money before providing any services.
Promises of Immediate Loan Forgiveness: Scammers often promise immediate and total loan forgiveness, even if you don't qualify for any forgiveness programs. In reality, loan forgiveness typically requires meeting specific criteria, such as working in certain professions or making a certain number of payments under income-driven repayment plans.
Pressure to Act Quickly: Scammers may pressure you to act quickly, claiming that you have a limited time to take advantage of their services. Legitimate loan assistance programs won't use high-pressure tactics.
Requests for Personal and Financial Information: Be wary of any program that asks for your Social Security number, Federal Student Aid (FSA) ID, or other sensitive personal and financial information before providing information about their services.
Guarantees of Success: No legitimate program can guarantee that they will eliminate your student loan debt. If a program claims guaranteed results, it's likely a scam.
Misleading Official-Looking Logos: Some scams use logos or branding that look official, resembling those of government agencies or reputable organizations. Always verify the legitimacy of any program independently.
Unsolicited Communications: Be cautious of unsolicited phone calls, emails, or text messages offering student loan assistance. Legitimate programs won't contact you without your request.
Lack of Transparency: Legitimate programs will provide clear and detailed information about their services, including fees, eligibility criteria, and potential outcomes. If a program is vague or unwilling to provide this information, it's a red flag.
Misrepresentation of Affiliation: Scammers may falsely claim to be affiliated with the U.S. Department of Education or other government agencies. Verify their claims independently.
Difficulty in Contacting or Researching the Company: If you have trouble finding information about the company online, or if they have a limited online presence, it's a warning sign. Legitimate organizations typically have a website and online reviews.
Phishing Attempts: Beware of links or attachments in unsolicited emails or messages. Scammers may use phishing techniques to steal your personal and financial information.
Offers to Sign Documents on Your Behalf: Avoid programs that offer to sign documents or handle your student loan paperwork on your behalf. You should always be involved in the process and understand what you're signing.
Too Good to Be True Claims: If an offer sounds too good to be true or claims that you can get rid of your student loans with little effort, it's likely a scam.
To protect yourself from fraudulent student loan assistance programs, research any organization thoroughly, check with the U.S. Department of Education or your loan servicer for guidance, and consult with a certified financial advisor or student loan counselor if you're unsure about a program's legitimacy. Additionally, report any suspected scams to the Federal Trade Commission (FTC) and your state's attorney general's office.
Signs of Fraudulent Student Loan Assistance Programs.
Here are some signs of fraudulent student loan assistance programs:
- They promise immediate student loan forgiveness or debt cancellation. There is no such thing as immediate student loan forgiveness or debt cancellation. All federal student loan forgiveness programs require you to make a certain number of payments on your loans over a period of time.
- They guarantee they can remove legally owed debts from your credit report. No company can legally remove legally owed debts from your credit report. If a company makes this claim, it is a scam.
- They require you to pay up-front fees. Legitimate student loan assistance programs do not require you to pay up-front fees.
- They ask for your personal information, such as your Social Security number or bank account number, before they have provided you with any services. Legitimate student loan assistance programs will not ask for your personal information until after they have reviewed your case and determined that they can help you.
- They pressure you to sign a contract. Legitimate student loan assistance programs will give you time to review and understand any contracts before you sign them.
- They are not affiliated with the Department of Education or a federal student loan servicer. All legitimate student loan assistance programs are affiliated with the Department of Education or a federal student loan servicer.
If you see any of these red flags, do not work with the company. It is likely a scam.
Here are some additional tips to help you avoid student loan scams:
- Only work with the Department of Education or its affiliated partners. You can find a list of the Department of Education's affiliated partners on the Federal Student Aid website.
- Don't respond to aggressive phone calls, texts, or emails with claims that are too good to be true. If someone is promising you immediate student loan forgiveness or debt cancellation, it is a scam.
- Don't pay for student debt relief. Legitimate student loan assistance programs do not require you to pay up-front fees.
- Protect your personal information. Don't give your personal information to anyone who claims they can help you with your student loans unless you are sure they are legitimate.
If you think you may have been a victim of a student loan scam, you can report it to the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB). You can also contact your state attorney general's office.