There are student debt forgiveness scams that students may run into, even if the worst student loan businesses may seem to be fraudsters. Student loan scammers may make it challenging for borrowers to obtain legitimate assistance when they ask for assistance with certain aspects of their loans, such as lowering their Balance or monthly payment, speeding up debt repayment, temporarily suspending payments, or removing loans from the delinquent status.
5 Common Student Loan Scams and How to Avoid Them
Here are the biggest and most typical student loan scams to watch out for, along with information on how to spot them to avoid having your money or credit taken.
•Forms must be Completed for Payment
Do you want to reduce your monthly student loan payment to a level that your income will allow you to afford? You can pay someone to fill out an application for an income-based repayment plan for you, but you can also do it yourself.
Application forms for income-based repayment are freely accessible on StudentAid.gov, the federal government’s official website for student aid.
The same is valid for applications for forbearance and deferment.
•Obtaining Loan Forgiveness, Cancellation, Discharge, Reduction, or Elimination for a Fee
Who wouldn’t want their debts forgiven? The unfortunate truth is that you nearly always have to pay interest on any money you borrow. Before any assets you leave behind may be handed to your heirs, your estate may need to pay off your debt (or any taxes on forgiven debt) even if you pass away.
It’s safe to assume that if a corporation offers to negotiate a student loan debt settlement on your behalf, it’s a scam given the way that borrowing rules and tax regulations are designed. If someone says they can help you get your student loans discharged during bankruptcy, don’t believe them. And they are unable to recover your loan.
•Programs of fictitious forgiveness or relief
Borrowers of federal student loans were given some relief by the CARES Act, which was passed in March 2020. This includes a suspension of payments and all associated collection efforts, as well as 0% interest. Multiple extensions to these clauses were made by the White House. However, keep in mind that this relief measure did not result in loan forgiveness.
•Demanding Personal Information
You won’t receive a call from the Department of Education asking for personal information such your address, SSN, account number, date of birth, FSA ID number, or account balance. Neither will a private collection agency hired by the government nor your student loan servicer. But con artists will.
By asking you to confirm your information, they might be trying to trick you. They need to confirm that they are speaking to the borrower, so that would appear like a reasonable requirement. Disengage if you ever find yourself in this predicament. Stop interacting right now. You don’t need to be polite. Your capacity to pay could be in jeopardy.
To avoid student loan frauds, stay away from businesses that approach you or show up in search engine ads. Even if you get a letter or a phone call from someone claiming to know something about your student loans, such how much you owe, it can be a scam. Businesses can purchase information about the obligations of borrowers and use that information in their marketing campaigns.
Any business that requires you to act right away should be avoided. They are trying to get your money before you have an opportunity to stand back and think about the situation rationally to see if it is a wise decision. Give a firm “No thanks” response in response to their relentless push.