If you are planning on applying for a student loan to help you get through college, you have to go into it with your eyes wide open.
First, there are risks in taking a student loan, some of which could impact your life for years (if not decades) to come.
Secondly, there are a lot of student loan scams out there. So you need to be sure that you are not falling into a trap set by low-lifes who have nothing better to do with their time.
We have listed some of the most popular student loans scam to help spread awareness. Avoid them at all costs!! Check them out below.
Student Loan Scams
Advanced Fee Scam
Be wary of online companies that offer you the “best” interest rate and loan terms. Especially the ones that requires you to pay a “small” fee up front for their service. Some companies require a minimum of 1-5% of the loan amount you’re getting, some require a flat rate of $1000 up front.
Instantly decline offers like these. On the internet, if something usually asks for your money up front, that is an immediate red flag. Under no circumstances should you pay any amount of money to get money. Keep in mind that legitimate student loans do not require you to pay money upfront.
The Debt Elimination Scam
Let’s say you’ve already gotten your student loan. Then, all of a sudden you receive a call from a company promising to eliminate all of your student loan debt. Or they might say they will cut your payments in half. They feed you promises such as wiping away your debt by using a new government program.
If those promises don’t sound fishy at first, we’re here to tell you that they are a scam. As we’ve written about in other articles, student loans are unforgivable even if you file bankruptcy. It’s something you cannot just wipe away unless Congress steps in to make that happen. So be careful of any company that promises to do this for you.
Law Firm Lawsuit Student Loan Scam
Another common student loan scam that has a lot of variations online is the law firm lawsuit student loan scam. This is basically where a law firm will call you to inform you that they will be able to settle your student loan debt. They will tell you that the law firm can settle your debt for thousands less than you owe.
That sounds like a nice solution to your problem, doesn’t it? In most cases, the law firm will ask you to make your full payment to them, then they will negotiate a settlement with your lender. If you cannot make the full payment, they will ask for whatever amount you can pay at the moment.
At the end of the day, the law firm cannot guarantee that they will be able to settle your student loan debts, and you will be left with a lower credit score and a settlement.
This article is part of our series: Student Loan Advice for Online College Students
The next topic in the series is: Student Loan vs Personal Loan