November 22, 2019

The most sickening student loan scams

With student loan debt in the U.S. now totaling over $1.6 trillion, a host of con artists have found the space ripe for student loan scams. These sick people want to take advantage of borrowers by charging for student loan solutions that are either available for free or don’t really exist.

Don’t allow yourself to get ripped off.  In this guide, we’ll look at the most popular student loan scams plaquing borrowers today.

5 of the Most Sickening Student Loan Scams

It should be pointed out that each of these student loan scams only applies to borrowers who have federal student loans. But about 92% of student loans today are federal.

So, for the vast majority of us, each of the five claims shown below will not be true.

If a “student debt relief” company (I use that term very reluctantly) tries to use any of these tactics with you, hang up the phone!  They’re lying to you and just want to get into your wallet.

1. The “Pay Us To Lower Your Monthly Payment!” Scam

Ok, so this is by far the most common of all student loan scams. Here’s the way this one works.

A company gets you on the phone and tells you that they can get you on a federal payment plan that will lower your monthly payment dramatically. All you have to do is pay them a small one-time (or monthly) fee.

But here’s the thing. The federal government doesn’t negotiate payment plans with debt relief companies like a credit card issuer may.

The only repayment plans that can lower your payment are income-driven repayment plans. And anyone can apply for an income-driven plan on their own for FREE.

Don’t pay someone to do something that you can easily do for yourself at no cost.

2. The “You Have a Limited Time to Act!” Scam

So here’s the way this one works. Some sleazeball company calls you up or sends you a mailer that says something like this:

“Your loan qualifies for student loan forgiveness! But only a limited number of borrowers will be accepted. Act now!”

This is total bull crap.

Currently, there are no student loan forgiveness plans set to expire any time soon. Not at “the end of the month!” ” the end of the year!” or any other time. And there are no “new laws” that suddenly require you to rush if you want to get relief.

But scammers want to create a false sense of urgency. Why? Because then they can conveniently offer their services, which can “expedite” the process for you.

But the reality is there’s no way to speed up the process. Let’s say you plan to apply for Public Service Loan Forgiveness (PSLF). Your application will take the same amount of time to be approved whether you filled out the application yourself or with the help of someone else.

3. The “Pay Us to Consolidate Your Loans!” Scam

By the time you graduate from college, you could end up with several student loans. And trying to keep up with the payment schedules on each of them can be exhausting.

Student loan scammers know this. So oftentimes they’ll act like they have a special power to help you consolidate your various federal loans into one…for a small fee of course.

But, again, this is something that anyone can do for free. It’s called a Direct Consolidation Loan. And you can apply for it today at no cost.

4. The “You May Qualify for Navient Student Loan Forgiveness!” Scam

Navient is one of the “Big Four” federal student loan servicers. And they’re by the far the most hated of the four.

For years, borrowers have complained that Navient misapplied payments, put them on the wrong payment plan, or gave them bad advice.

But things came to a head in 2017 when the Consumer Finance Protection Bureau (CFPB) sued Navient, saying that they were purposely and knowingly doing many of these things.

And since the announcement of the CFPB lawsuit, other lawsuits have followed from several state attorney generals and a teacher’s union.

There is No Such Thing as Navient Student Loan Forgiveness

Here’s the thing. Each of these lawsuits is still ongoing and probably will be for quite some time.

It should be pointed out that some borrowers may receive some compensation for Navient’s misdeeds. But complete student loan forgiveness because for Navient borrowers is not a thing.

And if anyone tries to tell you otherwise, they’re lying. So either they’re trying to charge you to get you into a forgiveness program that doesn’t exist or they’re trying to commit identity theft. Either way, it’s bad news for you.

5. The “You May Qualify for Immediate Forgiveness” Scam

Let’s be clear about something. There are NO federal student loan forgiveness programs that provide instant forgiveness to borrowers. Let me repeat — NONE.

Are there legitimate federal student loan forgiveness programs? Absolutely.

But each of them takes years to earn. For example, it takes 5 years to earn Teacher Loan Forgiveness. It takes 10 years (at a minimum) to earn Public Service Loan Forgiveness. And it takes 20 to 25 years to earn income-driven repayment forgiveness.

If anyone promises that they can get your student loans forgiven immediately, they’re trying to take advantage of you in some way. Hang up the phone.

Conclusion:

If you’re looking for student loan help, there are legitimate services out there. For instance, Student Loan Planner is a student consultation service that can help you choose your best student loan repayment strategy.

Each of the Student Loan Planner consultants is either CFP or CFA certified and they won’t try to sell you a load of bull. If you have over $50k of student loan debt, their expertise could save you a ton of money. Book a consultation with Student Loan Planner.

But if you have a smaller student debt amount, you can honestly handle your student loans on your own. There are plenty of guides online that can show you how to apply for income-driven repayment, PSLF, or any other program. So educate yourself and stay away from the student loan scams.

About the author 

Clint Proctor

Hi, I'm Clint! I love writing about everything personal finance. In addition to this site, my work has been featured on several major publications including Business Insider, Forbes, Credit Karma, and U.S. News and World Report. My hope is that you'll be able to find plenty of helpful information and inspiration on this site to help you reach your financial goals. Thanks for visiting!

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