3 Most Effective Ways to Identify a Students Loan Scam

Scammers are becoming creative each day. They are working around the clock to come up with better methods and more avenues for scamming people. Student loans are among the areas where scamming has become prevalent.

Reports have shown that borrowers of student loans are increasingly being targeted by scammers. The schemers are preying on the innocent people by emailing, calling, sending letters and text messages posing as debt relief companies. They do this claiming to be legitimate companies who are in the business to help students pay off their loans.

In a bid to falsely obtain some money from their unsuspecting prey, they normally charge a fee and ask you to provide your personal information. Once they get it, they either cease from communicating with you completely or offer to guide you through a process that you would have successfully figured out by yourself.

One of the promises such companies will make to you is that they can actually combine all your loans and offer lower repayment plans. In other cases, they take it a notch higher by claiming that they can grant you a student loan forgiveness at a particular fee. This is far from the truth, especially because you can apply for student loan forgiveness and consolidate your loans without having to pay a dime.

It is imperative that you avoid falling prey to these kinds of scams. Below is a list of some of the most effective ways to steer away from these scammers.

If the requirements include you making payments before any service is offered

If any company reaches out to you offering to help with your student loan and asks you to pay a certain fee, you should be alarmed. The fee they seek may either be in the form of one-off upfront payment or monthly fees. The reason why you shouldn’t make such payment is that the company will most likely receive the money and cut all the communication. However, if you have to pay a company to help with your loan, make sure you pay the fee once they have initiated and completed either part of the process, or finished it altogether.

Also, it is prudent that you take advantage of all the free resources before you result to paying a company to help you out. This can prevent you from losing money. If you need to make some adjustments to your loan repayment, first seek help from your servicer.

If you are asked to provide your complete loan account details

Giving your loan account details, including your password gives leeway to scammers so that they can execute their ill plans. More so, anyone who gets a hold of your Federal Students Aid ID details can successfully make any changes to your account without your authorisation. If the federal education department and related organisations can’t ask for your password, then why should anybody else do?

If any organisation calls you posing as the Department of Education or your lender, then they should already have your information. If you, however, get a call from any company seeking such information, it’s best that you tell them that you will get back to them. Do not give them your loan account details whatsoever. In any circumstance, you should be the one to initiate any communication concerning your student’s loan account, not the other way round.

If they insist that you sign a form to give a third party authorisation

Debt relief companies sometimes ask you to sign an authorisation form to permit them to get in touch with your loan servicer directly. Typically, this may be the power of attorney or simply a third party form. With this kind of authorisation, they can go as far as changing some of the essential information in your account without seeking your permission. Eventually, this can ruin your credit score or mess with your repayment information.

The best way to avoid this is by not signing any third party authorisation document. In fact, it is much easier and safer to contact your student loan servicer for any help. A financial adviser can also come in handy, to help you with any financial difficulties that you may be experiencing.

If you keenly observe these signs, you can successfully avoid getting caught up in an unpleasant scam.