Do you have student loan debt? Don’t fall for this scam

  
     
For millions of college students in the U.S., student loans can feel like a huge financial burden. In 2015, the average college student graduated with approximately $33,000 in student loan debt. The average student in Georgia and South Carolina graduates with more than $26,000 in student debt from federal and private loans, according to the Institute for College Access & Success.
August 05, 2016

BBB warns of student loan scams and offers advice to consumers with college debt

For millions of college students in the U.S., student loans can feel like a huge financial burden. In 2015, the average college student graduated with approximately $33,000 in student loan debt. The average student in Georgia and South Carolina graduates with more than $26,000 in student debt from federal and private loans, according to the Institute for College Access & Success.

Unfortunately, because student loan debt is so common, scammers use this as an opportunity to take advantage of current students and graduates. The scam starts as a phone call, email or letter to the student that claims their company can alleviate all student loan debt for a fee. They also claim to have helped other student loan holders; however, student loans can only be forgiven under very specific circumstances, which aren’t fast or easy. Instead of helping, they take your fee and disappear.

Summer is an especially busy season for this type of scam, and BBB sees a spike in reports. Scammers are targeting students right now because many have recently graduated or are trying to secure funding in time for the fall semester.

In another version of this scam, scammers claim that they can save you money by combining your loans. Others may move your loans to a private lender with a higher interest rate. Remember, if it sounds too good to be true, it probably is.

According to Debt.org, over 40 million Americans owe more than $1.2 trillion in outstanding student loan debt. There are three primary ways to alleviate student loan debt, and it depends upon:

  1. Type of career you choose (Public Service Loan Forgiveness)
  2. How many years you make on-time payments on a qualifying repayment plan
  3. Your ability to work and meet your loan obligations (student loan discharge)

In the last year, BBB Scam Tracker has received 180 reports of student loan related scams nationwide. BBB has also received reports of scammers calling people and saying they owe thousands of dollars in unpaid student loans. Former students have also been threatened with bad credit, lawsuits and even arrest if they don’t pay immediately.

Better Business Bureau advises student loan holders to look out for red flags and follow these tips to avoid getting scammed:

  • Never pay upfront fees. Avoid deceptive phrases like, “We do the work for a fee.” Real lenders will take a percentage once their service is complete and will never demand a fee upfront.
  • Never give a third party power of attorney. Don’t sign anything giving a company the power to negotiate on your behalf. A fake company can use this to take control over your loans.
  • Do your research and ask questions. Check to see how long the company or lender has been in business and ask questions. Does the lender appear to be well-established? Are they pushing you to make a fast decision? Remember, don’t give out any personal information, including your Social Security number, to unfamiliar parties.
  • Know your options. If you are having trouble paying back your student loans, contact your lender directly to discuss ways to make it easier to repay your debt. Options may include making lower payments or suspending loan repayments for a while. The type of student loan you have and the type of lender (government or private) will impact the kinds of options available to you.
  • Don’t ignore payment notices. Don’t wait to deal with the issue and never ignore legal notices about past due loans. Be aware that loan delays or other changes to loan terms will probably result in higher total loan cost over a longer period of time. For more information about coping with student loan debt, visit www.StudentLoanBorrowerAssistance.org.  
  • Keep your student loan debt under control. The Institute for College Access & Success works to increase public understanding of student debt. For more advice about student loans and debt, check out their Top 10 Student Loan Tips for Recent Graduatesat www.ticas.org.

For more consumer information, to file a complaint or report a student loan scam, visitbbb.org

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Kelvin Collins is president/CEO of the Better Business Bureau of Central Georgia & the CSRA, Inc. serving 41 counties in Central Georgia and the Central Savannah River Area (CSRA). This tips column is provided through the local BBB and the Council of Better Business Bureaus. Questions or complaints about a specific company or charity should be referred directly to the BBB at Phone: 1-800-763-4222, Web site: www.bbb.org or E-mail: info@centralgeorgia.bbb.org or info@csra.bbb.org