Avoiding Student Loan Consolidation Scams
When it comes time to pay off your student loans, you may be looking for outlets to help you. There are many different options that you can choose—from repayment plans to consolidation and deferment.
If you were told that your student loan debt could be wiped out and you would owe nothing, this would spark your interest, right? Of course it would, but they do say that if it sounds too good to be true, then it probably is.
Besides Student Loan Forgiveness programs, there is no one person who is going to pay off your debt and there is no one company that will wipe away the amount of money you owe. Before you give your information out to anyone, use the tips below to help you avoid student loan consolidation scams.
The Scam Itself
One of the most common student loan scams is the student loan consolidation scam and every year, students fall victim to it. The scam works like this. A company calls you and offers to consolidate the student loans that you have. This company will often tell you that there is a processing fee or administrative fee that needs to be paid.
The company will reassure you that once you pay the fee, your student loans will be consolidated. But, guess what! Your student loans never are consolidated and you are out the money for the “processing fee.”
The Problem with the Scam
There are a few problems with this scam. The first one is the most obvious one in which the company just takes your money and does nothing for you. You will find that you can never get ahold of the company and your money quickly vanishes from your bank account.
The next problem is that the company may actually consolidate any private student loans that you have, but they will place you in a worse position than you were in originally. This means that you may end up owing more money than expected monthly or your interest rate my shoot through the roof. Since these scam companies do not care about you, they do not care if they negatively impact your loan or not.
Lastly, another potential problem with the scam is that the company may offer to apply you for the federal direct consolidation program. If the company is offering to apply you under this program, they are scamming you if they are charging a fee since it is free to do.
Avoiding Scams
Keeping your credit score and money safe should be two of your top priorities and to do so, you need to know how to avoid scams when they arise.
If you find that a company is calling you to consolidate your student loans, do not go through the process. If you want to refinance or consolidate your loans, do so through your loan provider or see multiple offers with just one application here at LendEDU!
Before you agree to do anything, ask for the company name, phone number, and address of the company. Most of the time, these scam companies will hang up on you or provide you with fake information. Do not give in and always stand firm that you want this information. Once you have it, you can then research the company to find out more about them.
You need to also make sure that your loan provider will work with the company that is calling you. If your loan provider will not, then you do not want to consolidate your loans through them as you will be stuck in a sticky situation.
Never send money to a company that is demanding you wire them money or you pay a hefty service fee. Again, the process is free. If you do wire the company money, you may never hear from them again and you will be out of money that you cannot get back.
If you think someone is targeting you for a student loan consolidation scam, speak with your loan provider and alert the Federal Trade Commission right away.