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Having student loan debt is no fun—but for many students, it is a necessity. In fact, according to the Education Data Initiative, the average federal student loan debt now hovers just over $37,000 per borrower. The good news? With the right planning and budgeting, you could pay off your student loans in a timely manner.

Unfortunately, there are far too many student loan forgiveness scams out there, and college students are falling victim to them left and right. By being aware of what these scams look like, how to avoid them, and how to explore legitimate loan forgiveness options, you can protect yourself and your personal information.

Recognizing the Symptoms of Student Loan Forgiveness Scams

First, learn how to recognize some of the most common signs of student loan scams. This way, you will be able to avoid falling victim if you are approached by a scammer. Keep in mind, however, that student loan scammers are becoming savvier by the day, constantly coming up with new tactics and schemes to take advantage of unsuspecting college students.

The Alarm Bell of Immediate Student Loan Forgiveness Promises

So, what are some telltale signs of a student loan scam or debt relief scam? For starters, understand that the federal government (more specifically, the Department of Education) is the only agency that can actually offer legitimate student loan forgiveness programs.

With this in mind, if you are ever contacted by a third-party agency claiming they can erase your student loan debt, this is most certainly a scam. The Department of Education (DOE) will never contact you by phone as a first method of communication; instead, you would likely receive a piece of certified mail.

In general, any company that proactively contacts you and asks for your personal information is a scammer. This includes such information as your student loan ID, passwords, PINs, Social Security numbers, and other sensitive information. A legitimate loan forgiveness agency like the Department of Education will already have this information on file, so there would be no need to ask you for it.

Furthermore, if an agency or student loan debt relief company promises they can help you achieve immediate loan forgiveness or cancelation, this is also a sign of a scam. While the current administration is working toward more loan forgiveness, you should approach an immediate forgiveness with caution.

Oftentimes, scammers will also try to take advantage of college students by pressuring them to act quickly. They may try to convince you that these debt relief programs are only available for a limited time or that the offer will be rescinded if you do not agree to the terms immediately. A true student loan forgiveness program is not a “special deal,” and you do not have to commit to it within a certain time frame to take advantage.

The Threat of Upfront or Monthly Fees for Assistance

Perhaps most importantly, understand that no reputable student loan forgiveness program will require you to pay upfront or monthly fees for service. In fact, it is illegal for any type of student loan program to charge upfront fees for service. If a company is trying to get you to pay a deposit or consent to ongoing monthly fees to pay off your loans, consider this a huge red flag.

In some cases, scammers may even ask for your credit card or bank information with the promise that they will pay your student loan bills each month at a reduced amount. Either way, any program that charges you an upfront or monthly fee is sure to be a scam, as you should never have to pay anything extra in order to participate in a legitimate student loan forgiveness program.

How Pressure Tactics Indicate a Potential Scam

Scammers will go to many lengths to take advantage of somebody who is looking for help with their student loan debt. Often, they use pressure tactics (such as telling you that the forgiveness offer is only valid for a limited time) to get you to share sensitive information.

The Danger of Sharing Sensitive Personal Information

It is common for scammers to try procuring sensitive personal information from you as a means of committing identity theft or gaining access to your financial accounts to steal your money. This is why it is so critical to never give your information to anybody you suspect to be a student loan scammer. Remember, any legitimate loan forgiveness program (such as the DOE) will already have access to all information related to your federal student loans—so they should not have to ask you.

Unfortunately, sharing personal information with a scammer can lead to a world of stress and hassle for you down the road. This information can be used to gain unauthorized access to your financial accounts or open up new lines of credit under your name. All of this, of course, can lead to serious financial problems.

What Does It Mean if a Company Claims Government Affiliation?

Sometimes, student loan scammers will claim to be affiliated with the Department of Education, the Internal Revenue Service, or even the Public Student Loan Forgiveness (PSLF) program. However, the reality is that agencies offering legitimate student loan forgiveness will never reach out to you proactively. Instead, you would need to be proactive and contact these programs directly if you want to take advantage.

How to Respond if You Have Fallen Victim to a Scam

If you believe you have already fallen victim to a student loan scam, the best thing to do is first reach out to your student loan servicer directly. Let them know about the scam, and have them place a hold on your account so unauthorized changes cannot be made. Do the same thing with your banks and credit card companies, asking them to stop payments to the company (if there are any in progress).

In addition, you should submit a formal complaint to the Federal Trade Commission and the Consumer Financial Protection Bureau. It may also be wise to contact your local police department, as this could help them pinpoint if there are local scams going around.

The Steps Toward Legitimate Student Loan Forgiveness

Though there are numerous scammers out there, there are also some legitimate opportunities for student loan forgiveness that may be worth exploring. The Public Service Loan Forgiveness program is federally sponsored and may forgive the remaining balance on loans after 120 consecutive payments have been made and if you work for a participating employer.

Likewise, a Teacher Loan Forgiveness Program is available for teachers who have worked five consecutive years for a low-income school or educational agency. This program provides up to $17,500 in loan forgiveness.

Can You Get Genuine Help for Student Loans?

Government programs or directly contacting your loan service provider will be where you find the most beneficial help for your student loan needs.

What Should Your Loan Servicer Be Able to Do for You?

While your servicer may not be able to offer you loan forgiveness or cancelation, they are usually willing to work with you during tough times. If you cannot make a payment or are having trouble with ongoing payments, they might be able to make arrangements for a new payment plan or a deferred payment. The key is to get in touch with them and discuss your options.

Dealing with student loan debt can be stressful, but by following some basic tenets of financial literacy and responsible borrowing, you could avoid getting in over your head. At Post University, we offer loan entrance and exit counseling as well as other resources to help students make smart borrowing decisions and set themselves up for success.


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