Are you just starting college? Or have you graduated? Either way, you will probably utilize student loans for financial assistance. These loans are great in that they help you achieve your education. But what happens when the debt becomes too much?
Better Business Bureau has issued a warning for students who are over their heads in debt because of school loans.
Fake debt collectors reach out to students by telephone and email, offering a variety of ways to reduce or eliminate their debt, but there is a catch. The scammers want to be paid upfront before they start their work. Unfortunately, their "work" can leave the victims in even more debt and at serious risk of identity theft.
Student loans run in the tens of thousands of dollars and can take a decade or more to pay off. They are looking for help because they are desperate, and where there is desperation, con artists move in and the victims suffer even more.
The scammers tell students that they can reduce the amount they owe by as much as 90 percent through student loan forgiveness programs or debt consolidation. In order to do so, the swindlers claim that they require financial information, a Social Security Number and other sensitive information. They may also ask for power of attorney, which gives individuals the authority to act for another person in specific legal and/or financial matters.
Some of the early warning signs of a debt relief scam include blanket guarantees that debt load will be significantly reduced or eliminated, that the student is pre-approved for debt relief or is given an unusually attractive debt reduction offer.
Better Business Bureau offers these tips to prevent becoming a victim of student loan scams:
Don't do business over the phone or by email- Ask that they mail you information about their services in writing.
Do your homework - Visit bbb.org to see if they work for a legitimate company, how long they have been in business and whether there is a pattern of consumer complaints.
Ask lots of questions - Time is on your side, so don't make a snap decision to sign a contract or give out personal or financial information to someone you don't know, unless you have done your research and are satisfied that they are on the level.
Never pay upfront fees - Legitimate lenders will take a percentage once their service is complete. Unethical lenders will use high pressure "today only" sales tactics and want money before providing any services.
Beware of payment method restrictions - Steer clear of any business or individual demanding a non-traceable method of payment such as a cashier's check or wire transfer.
Get free debt management help - If you are in over your head, contact your lender to see if they can lower your payments or temporarily suspending them for a given amount of time.
You will find additional resources to help you manage your finances at bbb.org.