Spot student loan scam has been a major issue for many students and borrowers. In December 2022, the Consumer Financial Protection Bureau (CFPB) began mailing checks to over 23,000 people who had been charged illegal advance fees by student loan debt-relief companies. In January 2020, the CFPB filed a lawsuit against these companies alleging they falsely told borrowers that they could improve their credit score and lower their interest rate by consolidating their loans.
Knowing how to spot student loan scams is essential to protect yourself from potentially harmful companies who can cost you hundreds of unnecessary fees. The Student Advisory Board provides warning signs and spot student loan scam tips for consumers to look out for when dealing with a suspicious company. These include stranger offers of quick debt relief and being charged upfront fees prior to any service being provided. If you suspect fraudulent activity, it's important to report it immediately in order to save other consumers from falling victim to these scammers.
Spot Student Loan Scam: Tips to Report Fraudulent Activity
Student loan scams are becoming more and more prevalent, and it is essential for borrowers to know how to spot them. Knowing the right steps to take if you feel that you have been the victim of a student loan scam can help you get your money back and stop the deceitful company from taking advantage of other people.
If you believe that you have been a victim of a student loan scam, it is important that you file complaints with the Federal Trade Commission (FTC) and also with your state's Attorney Generals office. These agencies rely on consumer complaints to help police harmful student loan companies, so sharing your story can help protect other borrowers from losing money. Additionally, filing these complaints can also help you recover any money that was taken from you by a fraudulent company.
Finally, it is important to note that even though filing complaints can be time-consuming, in most cases it will not result in any loss of money for the borrower. Student debt relief companies may try to convince borrowers otherwise, but remember: always make sure to research any company thoroughly before signing up or giving out personal information - this way you'll be sure that what they offer is true.
Unlock Customized Student Loan Deals With Comparison
Comparing student loan deals can be a great way to unlock customized offers that fit your financial situation. However, it is important to know what to look out for in order to protect yourself from potential student loan scams.
The Federal Trade Commission (FTC) announced in February 2021 that a company had allegedly bilked millions of dollars from federal and private student loan borrowers by falsely promising them they could permanently reduce their monthly payments or even obtain debt relief. Education-desperate consumers may be tempted to take up these offers if they receive a phone call or seem affiliated with federal programs, but any promises of reducing monthly payments in exchange for an advance fee should be ignored.
It only takes 3 minutes to do some research online and check the legitimacy of any offer you are considering - the FTC’s website has an uncommon read on how to spot and avoid student loan scams. Make sure you always read the fine print before making any decision and remember, if something seems too good to be true, it probably is!
Get the Student Loan Help You Need
If you're struggling with student loan debt, you are not alone. Fortunately, there are established organizations that can help you discuss repayment options like a temporary payment pause or temporarily reducing monthly payments. Legitimate student loan organizations offer counseling services and other vetted resources to help borrowers manage their student loan debt better.
In addition to providing advice on student aid, established organizations have verified histories that make it easier for borrowers to trust them. Many of these organizations offer free financial counseling from certified nonprofit credit counseling agencies. They don't make calls, texts or emails borrowers demanding money upfront nor do they offer debt resolution services or payment plans of any kind. To spot student loan scams and avoid falling prey to debt relief companies, visit the Federal Student Aid site for more information.
It's important to find verified sources when dealing with your student loan debt so the advice you get is reliable and accurate. With the right help and resources at hand, you can be sure that all your questions regarding debt relief are answered properly and efficiently.
Uncovering a Scam: What's Next?
If you’ve fallen victim to a student loan scam, the first step is to take immediate action. It’s important to remember that you should never share your sensitive information such as login information for your FSA ID or your bank account numbers. Immediately log in and review your loan activity with your loan servicer or bank to identify any recent transactions. If you have shared your credit card information, contact the lender and stop payments on any fraudulent accounts.
Next, it’s time to file a complaint with the Federal Trade Commission (FTC), State Attorney General and Consumer Financial Protection Bureau (CFPB). They will investigate the student loan debt relief company and act accordingly if they find any wrongdoing. Additionally, reach out to the third-party, who may be able to review your case against the company who scammed you.
Finally, document all of this information in case it is needed at a later date during an investigation. Keep track of all correspondence between yourself and anyone involved in the scam as well as all other related information. Once you have taken these steps, you can rest assured that you are taking action towards protecting yourself from future scams!
Spotting Student Loan Scam Warning Signs
"Student loan forgiveness scams aren't to be taken lightly. Even though they can be hard to spot, there are some clear warning signs to watch out for. Look out for any red flags such as upfront fees, promises of guaranteed approval, and requests for bank account information. If you're ever uncertain about something, trust your gut and do more research."
1. The Company Charges Upfront Fees
No reputable student loan service provider should demand payment before providing basic services. Free federal loan services are usually handled directly by the Department of Education, and they offer income-driven repayment (IDR) plans, consolidation loans and other student loan forgiveness programs like forbearance. When talking to a debt relief company, make sure to ask if they have certified student loan counselors on staff. It's also important to research the company: look for accreditation from the National Foundation for Credit Counseling (NFCC) or another accredited nonprofit organization. Doing this will help ensure you have a positive experience with any student loan service provider you choose.
2. They Seek Your Personal Information
It's important to know how to spot student loan scams when you're looking for a loan. After all, your personal information is at stake. Unfortunately, some companies might be trying to access it without you even knowing about it.
Be wary of any company that asks for private information like your social security number or Federal Student Aid ID (FSA ID) before you've signed the loan contract. Also, ensure that you've vetted the company you're sharing this sensitive data with and make sure they have a good reputation. This way, you can protect yourself from student loan scams that might try to take advantage of you.
3. You’re Given Forgiveness Promises
Student loan forgiveness has recently become a hot topic for those trying to manage their total outstanding student loan debt. It’s important to remember that the federal government is the only source of legitimate student loan forgiveness options. That means that any offer from a private company or whomever else should be approached with caution.
To learn more about potential student loan forgiveness, borrowers should look into income-driven repayment plans and Public Service Loan Forgiveness (PSLF). These are both programs offered by the federal government and can offer substantial relief for those struggling with their student loans.
Frequently Asked Questions
Is student loan consolidation a scam?
No, student loan consolidation is not a scam. It's an effective way to simplify your loans and save money on interest—but it's important to do your research to ensure you get the best deal.
How do I file a complaint against a student loan servicer?
If you need to file a complaint against your student loan servicer, you can contact the Consumer Financial Protection Bureau (CFPB) or your state’s attorney general office. For more detailed information on how to file a complaint, please visit the CFPB website.
Are scammers on the move for student loan forgiveness?
Yes, scammers are actively seeking to take advantage of borrowers seeking student loan forgiveness. Be sure to research any offers that sound too good to be true and always double-check the source before entering into any agreements.
How do I stop student loan debt relief?
If you are struggling to pay your student loan debt, the best way to stop it is by working with a certified student loan counselor. They can help you understand your repayment options and create an action plan that works for you. Learn more about debt relief and find the right option for you today!
How do I avoid student loan forgiveness scams?
Avoid student loan forgiveness scams by only working with trusted, authorized and accredited organizations. Make sure to do your research and ask questions to make sure you are dealing with a legitimate provider. Check the Better Business Bureau website for any complaints or warnings before proceeding.