There are lots of ways criminals take advantage of people in today’s world. The greater levels of interconnection and speed make fraud more accessible to those with bad intentions. People tend to be even more vulnerable, however, when something important is on the line for them—such as their finances.
Student loans are a huge financial drag for millions of people. Many who go on to make good money later in life often still have trouble repaying these cumbersome loans. Desperation is fertile soil for fraud, as a consumer will be more inclined toward risky behavior. Scammers know this, and have realized those with student loans as a prime target for their schemes.
Avoiding student loan scams can be challenging in one sense because there are so many different iterations. These are a two of the most prominent student loan scams:
- Student Loan Forgiveness Scams – While there has been lots of talk about forgiving student loan debt, beware of anyone saying they can help you with this. Scammers know people will be overly excited to hear they might be able to cancel their student loans. In the moment, borrowers might not think about the dangers of giving away sensitive information like bank account numbers or their social security number. It’s highly likely anyone going out of their way to contact you for these services doesn’t have your best interests in mind. Those who are dealing with high interest rates or unappealing terms should consider a student loan refinance. This is a way to lessen some of the burden in loan repayment—especially for those with private or federal PLUS loans.
- Payment for Free Services – There’s a lot of conflicting information out there. Though this isn’t technically illegal, that almost makes it even more of a scam. You don’t need to pay anyone for basic services related to student loans, such as filling out forms or discharging loans. Organizations will attempt to charge you for these free services, which is within their right. Just be aware that you don’t actually need to pay anyone for many of these things.
Although most loan scams will fall under the general umbrella of these two categories, there’s no limit to how criminals will attempt to take advantage of you. This is why you need to know what to look for to avoid student loan scams.
How Can You Avoid Student Loan Scams?
There are two things that can help borrowers from falling victim to student loan scams: skepticism and being proactive. Let’s first think about this second aspect.
Anyone with student loans should consider what they can do to either lower their payment or get out of debt sooner. Refinancing is a great option for those who want to decrease their monthly payment. What is refinancing? It’s essentially taking out a new loan with a lower interest rate or other preferable terms to replace your current one. Those with private loans or federal PLUS loans, which don’t come with as many benefits as other federal loans, should always be thinking about if refinancing could be in their best interest.
Staying skeptical is the other critical piece of avoiding student loan scams. If something sounds too good to be true, you can almost guarantee that’s the case. Don’t fall for anything that’s advertised as a limited time offer. Any attempts to hurry you along is a surefire way to identify something fishy is going on.
Furthermore, organizations can’t charge you before they’ve provided some kind of service. Any attempt to assess fees prior to results is against the law.
The ultimate dangers of falling victim to a student loan scam can vary depending on the situation. While getting charged a few dollars to file paperwork might not be so bad, giving away personal information and falling victim to identity theft can lead to huge problems. Make sure to do whatever you can to protect yourself from student loan scams.
