The student loan crisis has had a devastating effect on both students and the economy, with the second-largest consumer crisis after the mortgage crisis being student debt, contrary to what many people think, people with this crisis. Involved are not only young graduate students, but many seniors still have student debt.
As you know, a lot of money is allocated to student loans every year. Some scammers try to take advantage of you by providing services and making false promises to increase your money.
In this article, we are going to talk about these scams that exist when applying for a student loan and teach you how to avoid these scammers. Stay with us.
Before we talk about these scams, you first need to get to know the people who offer these loans.
You may have seen many companies on Google, Instagram, Facebook, etc. that advertise student loans. These ads are usually in a way that tempts you to contact these companies and register for a loan.
But these companies may not act as they promised in the ads, so you need to first make sure they are trusted before registering to receive such loans!
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- The advanced fee scam:
In this type of scam, a student loan company promises you the best interest rate and loan terms, but it has certain conditions. One of them is that you have to pay a “small” fee in advance. This fee can be around 1-5% of the loan amount or it can be a fixed fee (for example $500)
If you come across such an offer for a student loan, you should know that legitimate student loans do not require any additional payment and should not be charged in advance. If the loan has a commission, it will be paid at the same time as the monthly repayment amounts.
If you seek help from a third party company to pay off your student loan debt, they may charge you a fee. But this fee must be paid into a deposit account (or third party account) and the company will only receive a salary if it is proven that they have helped you.
- Total elimination of debt:
In this type of scam, which has become very common, fraudsters claim that they can pay off the borrower’s student loan debt in full. In this regard, you should know that student loan debt can not be eliminated in any way except in the following cases that are eligible for federal:
- School closure
- Identity theft
- Death or permanent disability
Loans are forgiven only after several eligible payments have been made, and there is no way to expedite this process for federal loans.
Since it is not possible to get rid of mortgage debt, there is usually no need to rush into payment.
- Loan consolidation scams:
Loan consolidation scams are another common scam in the field of student loans after graduation. In this way, the fraudulent company will charge you for the loan merger but will do nothing for you.
Any company claiming to be affiliated with the Ministry of Education to merge your loans is likely to exploit you. If you are a borrower, you can merge and repay a federal student loan at no cost.
Another thing to consider is whether or not these companies advertise on social media or search engines. If these companies spend a lot of money on advertising, you should know that they are looking to make a profit and defraud you. Therefore, according to the above points, it is important that you do not submit your personal information to online advertising forms and research before receiving such loans.
A Few Misconceptions About Student Loans:
Federal and private loans are the same: No, there are many differences between the two types of loans, including the difference in interest rates and so on.
Loans are automatically extended until graduation if the loans are for one academic year.
Always get federal loans before private loans, and after using your federal loan option, compare the offers of several private lenders to find the lowest interest rates.
Federal student loans are based on student income after entering the job market at a fixed interest rate, but while private student loans are accompanied by late penalties and variable interest rates, and unlike some federal loans, private loans it is not based on financial need. In fact, you may have to pass a credit check to prove your credit, and private interest rates can be fixed or variable.
Ways To Prevent Student Loan Fraud:
Now for the other scam loans, you receive emails regularly.
Some student loan companies offer everything you can to get your money back, including offering to do things you can do (like signing a payday loan) or making silly promises to extend your debt.
If you do not know if the email you received was fraudulent, you should ask the following questions.
Does The Company Want Your Money?
Do you pay the application fee to merge your loans or pay monthly to terminate your loan?
Do they make unrealistic promises?
For example, do they tell you that they can lend? The federal government has created student loan programs that face stringent conditions and can take decades to develop.
Do they want your personal information?
Do they want your account number, FSA number, or even your power of attorney? Your trusted lender has already provided you with all the information you need. Do not share your information with fraudsters.
Paying off student loan debt can be very stressful for you. Many scammers may take advantage of you with fake offers to defer, reduce, merge, or eliminate debt. Many of these scams can cost you thousands of dollars in debt and multiply your debt.
In this article, we introduce three common student loan scams and ways to prevent them. As mentioned, before considering any student loan, it is necessary to review all the options make sure that the lending company is valid and you should consider the existing restrictions.
“If you have any feedback about student loans scams and how to avoid them that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”
NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.