Recognizing potential scams can help you evade becoming target to exploitative tactics.
Regrettably, with the inception of any plan where vast sums of money are involved, fraudulent schemes typically arise. Whether it be during tax season or when stimulus checks were disseminated amid the COVID-19 pandemic, or the recent resumption of student loan repayments, tricksters are always at work.
Here are three prevalent types of student loan scams that you should be cognizant of as you begin to repay your loans.
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Bogus Assistance or Cancellation Programs
Numerous agencies assert to have your student loans pardoned or absolved, commonly through “limited offer” or “exclusive” programs. Do note that authentic student loan forgiveness programs are only administered by the Department of Education or by corporate employers as an employee incentive. You can explore all the credible methods to qualify for federal loan forgiveness on the Department of Education’s website.
Counterfeit Department of Education Websites
Frequently seen during tax scams, tricksters send emails directing you to deceptive official sounding websites like IRSgov.com instead of the authentic IRS.gov. Such websites are unambiguously fabricated with an intention to either steal your personal data or deceive you into transferring money to tricksters.
The bona fide Federal Student Aid website is studentaid.gov, and the official platform for Department of Education is ed.gov. If you find yourself being directed to a website that ends with .com, .net, or any other than these legitimate ones offering federal student loan information, be wary.
Paying for Services You Can Handle Yourself
Even though not specifically a scam, hiring a third-part company for actions such as enrolling you in an income-driven repayment plan equates to paying someone to file a tax extension for you. These are tasks you can easily accomplish on your own, sparing both money and ensuring the legitimacy of the process.
Here are a few services you should never outsource to a third-party entity, as they can be performed effortlessly and without any charge:
- Applying for loan forgiveness.
- Enrolling in a new payment plan.
- Filling out a FAFSA or applying for student aid.
- Consolidating your student loans.
- Applying for a deferment or forbearance to temporarily pause your payments.
- Resolving your student loans default issues.
Detecting a Scam
Recognizing student loan scams can be tricky. To help, the Department of Education offers some indicators to assess if a student loan relief proposal is counterfeit or genuine:
- Initial Payment: Recognize this red flag. Virtually all scams can be spotted if you’re being asked for an up-front payment. Reliable student loan relief does not require any type of initial payment. If you are requested to pay a fee or provide credit card information to join a relief program, it is definitely a scam.
- Prompt Forgiveness: Even the Department of Education itself cannot guarantee immediate loan forgiveness. Even the most lenient student loan forgiveness plans take years to qualify for.
- Unique Offers: No intermediary company can negotiate a “special offer” with the Department of Education or your loan servicer. Terms for student loan repayment plans and forgiveness opportunities are fixed by law.
- Third-Party Approvals: Do not sign a form granting a third-party the right to make decisions regarding your student loan servicer on your behalf under any circumstance.
- Temporarily Extending Programs: Only a few temporary student loan relief programs exist, and the Government is clear about them. Evade any “limited-time offers”, especially those claiming loan forgiveness.
- Spelling Mistakes: Scrutinize details, as I recently detected a sophisticated scam related to my Amazon Prime account due to a misspelled image. Similar vigilance is required with student loans. The Department of Education is very thorough in proofreading its communications.
Identify the Valid Sources
Lastly, knowledge of reputable sources of information can help you in recognizing a student loan scam. The most reliable source of information about student loans is the Department of Education, which operates the official Federal Student Aid website (studentaid.gov). Other reliable sources include Whitehouse.gov and your student loan servicer. Beware of any websites or communications not originating from these addresses.
