BBB warns of student loan scams
Published 4:55 pm Monday, May 8, 2017
RALEIGH — With students in North Carolina graduating with an average of $25,000 in student loan debt, scammers have begun to find different ways to take advantage of those who are desperate to become debt free. Better Business Bureau serving eastern North Carolina offers advice to new graduates and people who are currently in repayment in order to avoid these scams.
The scam usually starts as an email, phone call or advertisement on the radio or social media from a company claiming they can alleviate your student loan debt for a small fee. In another version of the con, scammers claim they can consolidate your student loans and save you money in the future. Instead of helping alleviate or consolidate your student loan debt; scammers will take your fee and disappear.
It is important to note that federal student loans can only be forgiven under specific circumstances depending on your career, how many years you make on-time payments, and your ability to work and meet your loan obligations. The majority of private student loans do not offer any loan forgiveness.
“BBB has recently seen an increase in calls from consumers with questions about student loan forgiveness offers or loan consolidation,” said Mallory Wojciechowski, president and CEO of BBB serving eastern N.C. “Students and graduates should be aware that these scams are out there and become knowledgeable enough about their options in order to avoid being scammed.”
BBB serving eastern N.C. advises consumers to consider the following tips and avoid student loan forgiveness scams:
- Never pay an upfront fee. Legitimate lenders will take a percentage once their service is complete, and they will never demand an upfront fee.
- Be cautious of verbal promises. Never agree to anything over the phone and always ask a company to send you their offer in writing. Then, contact the U.S. Department of Education to make sure the offer is legitimate.
- Do your research. Check out business profiles and customer reviews at bbb.org to make sure you are dealing with a reputable business or lender that won’t abuse your financial or personal information.
- Never give a third party power of attorney. Don’t sign anything giving the company power to negotiate on your behalf. A fraudulent company can use this to take control of your existing loans.
- Know your options. If you’re interested in consolidating your student loans, contact the Loan Consolidation Information Center at 1-800-557-7392 or use your FSA ID to log in at www.studentloans.gov. You don’t need a company to help you consolidate your loans, but you do need to know if you’re eligible for consolidation.
To file a complaint or report a student loan scam, visit bbb.org.