How to Avoid Student Loan Scams

Student loans have become an essential tool for many students in pursuit of higher education. Unfortunately, the student loan management process of obtaining and repaying student loans can be complicated and overwhelming. 

To make matters worse, there are a variety of education loan scams out there that target unsuspecting borrowers. Student loan scams have become highly common in today's world. These loan scams can leave borrowers in financial ruin and make it even more challenging to repay their student loans.

In this blog, we'll explore the most common loan scams, how to recognise them, and what you can do to protect yourself. Whether you're a current student or a graduate struggling with loan repayment, this information will help you avoid falling victim to loan scams and keep your finances secure.

Student Loan Scams

So what are student loan scams essentially? These scams are fraudulent activities that target students and graduates seeking financial assistance to fund their education. These loan scams can take many forms, but they all have the same goal: to trick borrowers into giving away their money or personal information. There has been a rise in loan scams in recent years. 

Education loan scams generally involve individuals or companies promising to help borrowers reduce or eliminate their student loan debt in exchange for a fee but then failing to deliver on their promises.

1. Paying upfront/form fees: 

It's probably a student loan scam if a business asks you to pay a deposit or tries to pressure you into signing a contract right away. Before they explain how they will assist you, some businesses may even demand your credit card number over the phone or online. Do not do business with organisations that demand money before they perform any services, especially if they are attempting to obtain your student bank account or credit card information. 

Never forget that your student loan servicer offers free assistance. Before offering assistance, businesses that demand money for debt relief services are breaching the law and are a part of the crime called student loan scam. There is nothing a student loan debt reduction firm can do, especially with the aid of your loan servicer, you can't do yourself. 

Anyone saying otherwise is part of education loan scams. Your loan servicer will work with you to adjust to a more manageable repayment schedule if you're having trouble keeping up with your monthly payments at any time, at no extra charge to you.

2. Student loan forgiveness scams:

In a student loan forgiveness scam, victims who are having trouble repaying their student loans are targeted with promises of assistance in having the debts discharged or forgiven. In a student loan forgiveness scam, victims who are having trouble repaying their student loans are targeted with promises of assistance in having the debts discharged or forgiven.

Even the FBI has issued a warning that con artists may target folks who are requesting student loan forgiveness. This is the perfect opportunity for loan scams.

According to the agency, education loan scams—which may take the form of emails, texts, phone calls, websites, or online chats—may attempt to defraud borrowers of federal student loans of their private information or money.

3. Student loan forgiveness scam calls: 

According to cybersecurity experts, student loan scam calls are only the most recent variation of phishing scams. The goal is to persuade individuals to provide their information or money without thinking twice, whether it looks like they are asking for financial assistance following a significant calamity or simply offering a great deal from a reputable retailer and performing a student loan scam.

Phishing does not only appear as email. Also, customers should look for dubious text messages, social media posts, QR codes, and phone calls.

4. Legitimate student loan forgiveness companies: 

Even though there has been a rise in loan scams, there are legitimate organisations that help students and also protect them from loan scams.

There are actual student debt forgiveness scams that borrowers may get into, even though the worst student loan scam businesses may seem like con artists. 

Education loan scams 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, repaying their loans more quickly, pausing payments temporarily, or getting loans out of the delinquent status.

5. Student loan consolidation scams:

Offers for loan relief and loan consolidation schemes are the most prevalent student loan scams. Consolidation of Student loan scams is the easiest way to perform a student loan scam. Consolidating your federal student loans with a company that demands payment in advance is fraudulent. Without ever combining your loans, these businesses will grab your money from you under the pretence of a processing charge.

6. Federal Student loan scam:

A federal direct student loan is the greatest option for students who need to borrow money to pay for education. Federal direct student loans don't need a co-signer or a credit history, in contrast to private student loans. Also, they give debtors greater options for repayment and default prevention measures. However, this domain has become an easy target for loan scams.

In conclusion, student loan scams are a significant problem for individuals seeking financial assistance to pay for their education. These scams take many forms, from false loan forgiveness promises to fraudulent loan consolidation services. To avoid falling victim to these scams, it's crucial to do your research and thoroughly vet any organisation offering student loan assistance. 

How to Avoid Student Loan Scams

After understanding these student loan scams and knowing how to spot them, the next step is to learn how to avoid these scams. Here are some ways to void Student Loan Frauds and scams:

1. Avoid Signing up for Quick Loan Forgiveness:

Scammers might tell you they can help you get rid of your loans even before they understand your situation. They may offer a loan forgiveness program that most people don't qualify for or claim they can clear your loans by disputing them, but they cannot get you into a loan forgiveness program if you don't qualify for it or erase your loans in this way.

2. Don’t Pay an Up-Front Fee:

It is illegal for any company to ask you to pay money before they have provided that service or before they help you. Paying before you get your services upfront may lead you to not get any help and no refund either. 

3. Don’t rush yourself:

Scammers might tell you to act quickly by telling you that you might miss repayment plans, loan consolidation, or loan forgiveness programs if you don't sign up immediately. Don't fall for their tactics, and take your time to check out the details before making any decisions.

How to Spot Student Loan Scams

Now that you know what some of the common student loan scams are, here are some things to look for to make sure they are scams or frauds. As it is important to understand how one can spot these loan scams only then a necessary action can be taken. Often people lack insights in understanding student loan scams which later makes them a victim of the same.  After all these years of research and understanding many aspects of student loan scams, we have finally understood a few things that one needs to know to spot student loan scams.

1. Immediate Loan Forgiveness or Cancellation

This is one of the most important aspects one needs to keep in mind while spotting student loan scams. A student loan company may call you and claim to forgive your student loan however, stay alert and aware of such scam calls. Such student loan forgiveness programs offered by the government are very rare and take years to execute. Hence, don’t fall prey to such calls.   

2. Loan Forgiveness Due to Discontinuation of School

Another student loan scam to look out for is such calls that claim to forgive your student loan. These spam companies get the records of your school and specifically target you if your school is discontinued or if the school is being sued by another company. Beware of such scam calls as they may lead you into fraud and you can lose out a lot of your money. 

3. A Company Offering to Settle Down Your Loan

Well, some loan scams may call you and offer to settle down your loan either by suggesting that they will buy your loan some other way. Such scam calls may come up with a proposal of settling some of your loan amounts. Our advice is don’t pay attention to such scammers as all they are trying to do is to lure you into such schemes and get money out of your pocket. 

4. Claims to be Working with the Department of Education

Another strategy that scammers have started using is claiming to have a relationship or collaboration with the Department of Education. Such calls are made keeping in mind the importance and influence of the Department of Education hence, they use its name to wow you and rob you of your money. 

5. If a Company Promises you a Set Payment or Forgiveness.

Well, the aim is to lure students into their scam hence such companies may call you and claim to forgive your student loan. This usually doesn’t takes place, if you have taken a loan then you are required to pay it off. Don’t fall for such scammers instead spot them and report them. 

Now that you have read all about scams, the types of student loan frauds, and how to spot and avoid them, we hope that you won't fall prey to them. It's important to keep track of such important information to avoid becoming a victim of such fraud. Make sure to spot such scammers on the spot so that you will not entertain them any further. Hence, it is essential to be aware of such patterns so that you can protect yourself and even help your friends in spotting such scams. If you wish to know more about student loans, read our blogs on the best student loan providers and tips for student loan management.