As things stand now, there are more than 44 million people who collectively owe a whopping $1.5 trillion in student loan debt in the U.S Clearly, this is an issue that needs to be addressed. The problem is that there just aren’t enough jobs for these graduates to try and offset their student loan debts as quickly as most would like.
The other issue is that there are some who just aren’t willing to pay off student loan debt and would rather find ways to push that back as far as possible as they try to deal with other “life” problems. However, just because so many people owe so much in student loans should not scare you off. There is a reason why student loans are so popular:
- They make it possible for less fortunate students to survive through college
- They give post-graduate students a chance to further their studies and better their employment prospects
- They make it possible for families to make ends meet (in the case of student loans that are available for both parents as well as students)
44 million people! That is a large pool of potential victims for unscrupulous individuals looking to cash in on students who are desperate to get their hands on any form of financial aid for their education. As you would expect, whenever there is such a large pool of people looking to get something, there are those who will always come up with a way to scam a percentage of them. Here are some common student loan scams and how you can avoid them.
Student Loan Scams and How to Avoid Them
Let us start by stating the obvious: the reason why people fall for so many student loan scams is that they are constantly looking for shortcuts to getting out from under the weight of their student loan debts. This is the basis of most student aid scams (keep that in mind). With that being said, here are some common student loan scams you should always be on the lookout for as you try to pay down your debt:
The “Elimination of Student Loans Debt” Scam
This is one of the most common scams in the market today. Some companies claim they can help you get rid of your student loans without you having to pay it back- at a small fee of course! Rest assured that this is a scam!
While there are special circumstances under which you can get your student loans debt eliminated, none of them even hint at hiring “the right kind of student loans debt elimination” company. Some of the reasons why you could get away with your student loans without paying them to include:
- Permanent disability
- Identity theft
- School closure (not always)
Of course, there is the ultimate reason – death but you would agree that dying falls under the extreme end of the lengths one would go to avoid paying their debts! This scam often goes something like this: “If you attended a certain “for-profit” college, then we can help get your student loans eliminated.”
How to Avoid this Scam
As we have already said, there are ways through which you can get your student loans forgiven, but they have to be special circumstances. Do NOT pay anyone any money to help you eliminate your student loans; they simply cannot do it!
The “Student Loan Consolidation” Scam
When you have a lot of student loans from a variety of lenders (as most people do), the most prudent thing to do is to get those loans consolidated so that you only have one repayment per month that caters to all of them. This way you avoid accidentally missing some payments just because they slipped through the cracks and you might even get a favorable overall repayment interest rate. Now, the scam comes in when a company says that they can help you consolidate your student loans at a fee! This fee is often given some technical name such as:
- Processing fees
- Consolidation fees
- Administrative fees
Rest assured that this is a scam. You do not have to pay anyone a fee to help you consolidate your student loans.
How to Avoid this Scam
The simplest way to avoid this scam is to carry out the student loan debt consolidation yourself at the student loans consolidation section of the Student Loans website.
The “Advanced Fee” Scam
When going through your options, you will obviously want to choose the best. Meaning a student loan program that gives you the most money at the lowest interest rate. Most scammers realize this and pretend to be able to get you such a deal at a fee.The fee often falls between 1-5%, or it is a flat rate of $1,000 that is to be paid up front. This is a total scam. You should never have to pay money to get money, at least not when it comes to student loans. Note that although some fees will be typically paid with some student loan programs such as the 1% default fee charged for federal student loans or a disbursement fee charged by private loans, all these fees are never paid up front. They are always included in the repayment amount and are typically amortized over your repayment period.
How to Avoid this Scam
Simply do not pay any upfront fee to any company claiming that they can get you better deals. Always apply for your student loans yourself. That way you know what you are really getting into and how much will be expected of you. Do not let desperation or rush decisions cloud your judgment when it comes to acquiring and paying off student loans. Take your time to research by using credible sources. When dealing with private lenders only ever speak to people in their official capacity from their head offices as opposed to on social media platforms or even on the phone.