BY- SAHIL SAIFI
This scam involves a student loan company that tells you they can get you the "best" interest rate and loan terms, but you have to pay a "small" fee up front for this service. The fee can be anywhere from 1-5% of the loan amount. Sometimes the fee is a flat rate up front (say $1000). If you come across this offer - RUN! There are no circumstances in which you should have to pay money to get money. Legitimate student loans, even from private lenders, do not require any fees up front. If there are any fees, they are deducted from the disbursement check or they are included in the repayment amount and are amortized over the repayment period.
After you graduate, it might be a good idea to consolidate your student loans. This is another area that is ripe with scams. The most common student loan consolidation scam is one in which the company charges a consolidation fee, but actually does nothing. The fee is sometimes called processing fees, administrative fees, or consolidation fees.
This is a scam where a law firm will claim to be able to settle your student loan debt. There are a lot of variations on this scam, but typically a borrower is referred to a law firm by a "student aid company". The student aid company promises that this law firm can settle your student loan debt for thousands less than you owe. Many times the law firm will ask you to make your full student loan payment to the the law firm itself (or whatever amount you can afford to pay). The law firm says they'll then negotiate a settlement with your lender.
The important thing to remember about student loan debt is that it must always be repaid - it cannot be eliminated unless you have a federally qualifying reason (death, permanent disability, school closure, falsification of documents or identity theft). If you come across a company that promises to get your student loan debt eliminated, it is a scam!
There are times when it's not a scam, but it just seems like one because the customer service is bad or paperwork gets “lost”. For example, I get a lot of readers asking about the FedLoan Servicing Scam. FedLoan isn't a scam, but just a poorly run student loan servicing company that is looking out for their own best interest.
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– Any company that claims to have a relationship with the Department of Education (third-party companies do not have any relationship with the Department of Education) – Any company that promises you a set payment or forgiveness (companies cannot promise forgiveness or guarantee an income based repayment because both will change based on your income) – Any promise of immediate loan forgiveness or cancellation – Any promise that a buyer will buy the loan and settle it for a set amount – Any promise that because your school closed or is being sued, you an get forgiveness – Any telemarkerter that calls you and says a president's name and "Student loan forgiveness program"
Even though I’ve said countless times you can do it for free at StudentAid.gov, there are still people who’ve asked me “that’s great Robert, but I still want to pay someone to help me – who can I trust?” That’s a fair question, so who can you trust?
Next, call your student loan servicing company. I know this sounds counter-intuitive, but 80% of issues and concerns can be resolved by simply calling your loan servicer. These free options are usually your best bet for help with student loans.
Top Student Loan Scams You should know