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Across the country, college graduates are having difficulty making their student loan payments. With the cost of tuition skyrocketing at both private and public universities, it’s little wonder that so many borrowers are drowning in student loan debt and looking for student loan help. When so many people are struggling with a certain problem, scam artists can find a way to exploit that problem for their own gain. In this case, the prospect of student loan forgiveness is being exploited by today’s scam artists.
What are Student Loan Forgiveness Scams?
Student loan forgiveness scams are offered by companies or individuals promising to help borrowers get their student loans forgiven or cancelled. Generally, these scam artists charge desperate borrowers a fee for their “services,” and afterwards, they disappear without doing anything at all.
In some cases, the scammer charges monthly fees for their “assistance” in obtaining student loan forgiveness or debt relief. After some time, the borrower should realize that they didn’t receive any help at all, and the company offering any student loan help is either gone or unreachable.
In reality, student loan forgiveness is only available through specific programs offered through the United States Department of Education. There is no charge for looking into these programs and requesting assistance from the government, and there is certainly no application fee for borrowers who meet the very specific requirements of each loan forgiveness program.
3 Warning Signs of a Student Loan Forgiveness Scam
While some legitimate student loan forgiveness companies may exist to help borrowers with the paperwork, it is best to work through the government individually. If an organization is not upfront about the fact that a borrower can do this for free by going through the government’s website, it may be a sign that the company is attempting to perpetrate a fraud. Read on to learn some other warning signs of a student loan forgiveness scam.
1. Telling You to Make Payments to Them
Some shady student loan forgiveness companies may instruct you to make your payments to them. They may promise to make the payments on your behalf. Logically, this does not make sense: why would you need to route your payments through a student loan forgiveness company? Your payments should always be made directly to your loan servicer. That should be clear from the start when paying back your loans, and no other company should be involved as a middle man of any sort. On that note, your loan servicer is responsible for notifying you of potential loan forgiveness, and if you are already in a program, your servicer is supposed to notify you when you complete the forgiveness requirements.
2. Claiming to Work With the Department of Education
The Department of Education does not work with companies to process student loan forgiveness applications, so any individual or organization that claims to be working with the federal government on a student loan forgiveness program is not being honest with you. The Department of Education will not contact you via telephone or email about your student loans, and they will not send a private company to call or email you about debt relief and loan forgiveness. They will only correspond with you about your loans directly via mail. Do not fall for anyone claiming to be contacting you on behalf of the Department of Education!
3. Contacting You via Mass Marketing
If a company contacts you via an auto dialer, spam email, or mass mailing, then chances are good that they are not a legitimate student loan forgiveness company. In fact, the chances are very good. This company may have obtained your information (such as the fact that you have student loans, or the amount of your student loans) in an unauthorized or illegal manner, which is a huge red flag. Avoid any company that contacts you in this way.
As an overall rule of thumb, you should always be wary of unsolicited offers whether they are through email, phone call, or any other manner of communication.
Author: Jeff Gitlen