Students

4 Student Loan Scams to Watch Out For

Comments 13 Comments

4 Student Loan Scams to Watch Out ForThere’s been a lot of recent buzz around the price of college education and no one seems to be able to escape the heat of tuition costs anymore. Adding fuel to the fire are scams that seek to exploit young borrowers. Which is why you should be aware of the prevalent scams that affect students applying for student loans and scholarships — as well as graduates who are in student loan repayment — and what you can do to make sure you don’t fall victim to them.

Scams to Watch Out for If You’re a New or Continuing Student

Are you just starting college? Applying for loans and scholarships for the first time can be an arduous and confusing process. Luckily, there are plenty of free resources available to help you.

  • FAFSA — this is the form you have to fill out to apply for federal aid (including loans and grants). It should only be accessed via http://www.fafsa.ed.gov/. Never access this anywhere else (including FAFSA.com, which is a known scam) and never pay anyone to fill it out for you. This form is free and if you need help filling it out, visit your school’s financial aid office. Need more help? Visit The Federal Student Aid page of The Department of Education’s website for information on how the FAFSA works.
  • Scholarships — just like your FAFSA form, don’t pay anyone to help you with scholarships. You can find a myriad of scholarship opportunities on Fastweb.com that range from scholarships for high GPAs, for people of a certain heritage, for those involved in specific extracurriculars, and more. Any website or person that wants to charge you, guarantee they can get you a scholarship, or asks for money to hold a scholarship is definitely a scammer.

Red Flags: Beware of anyone that charges a fee, guarantees a certain result or reward, asks for your financial information to “hold” a scholarship, pressures you to make a quick decision, claims to have an inside track on gaining a scholarship, won’t give you detailed information on what you’re applying for, claims you won a scholarship that you didn’t apply for, and anything that sounds too good to be true.

[Credit Score Tool: Get your free credit score and report card from Credit.com]

Free Credit Check & MonitoringScams to Watch Out for If You’re in Loan Repayment

Are you a college graduate? If so, now’s the time to start thinking about student loan consolidation. But how can you know that the consolidation you’re seeking is legitimate? Only get your information through trusted resources:

  • Federal Loans — These should be consolidated through The Federal Direct Program. This will lock in your interest rate and make available a variety of payment plan options based on your situation. There are even other programs like The Public Service Loan Forgiveness Program which were created to help those in specific career fields (such as public service fields like teachers, police officers, non-profit workers, and more) so talk to your lender to see what you’re eligible for.
  • Private Loans — You can consolidate private loans through your lender or shop for one with better rates. FinAid! is a trustworthy place to find a comprehensive list of options and lenders. It is also possible to consolidate your loans by rolling them into a home loan or home equity line of credit, but of course that only works if you’re currently a homeowner.

Red Flags: Beware of any program that claims it will eliminate your six month grace period, claims they can discharge your debt quickly and easily, tells you that you can discharge your debt by sending a check to your lender with the memo line “For the Discharge of Debt”, or pressures you into a quick decision.

Once you find the right program and are all set to pay off your student loans, be sure to research how to get started on your payments and stay on track. For further information on scams and how to protect yourself, visit Federal Student Aid. If you think you have already been victimized by a scam, then you can file a complaint here.

[Free Resource: Check your credit score and report card for free with Credit.com]

This story is an Op/Ed contribution to Credit.com and does not represent the views of the company or its affiliates.

Image: iStockphoto

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Pingback: 4 Student Loan Scams to Watch Out For

  • Pingback: Why You Should File Your FAFSA Now | Credit.com News + Advice

  • Pingback: Why You Should File Your FAFSA Now | ComparePlastic

  • joanna

    Why is FAFSA. com a scam? If you pay a one time fee to have them maintain the paperwork for the extent of the undergrad years that is one less thing you have to remember to do. Do they not fulfill their end of the deal for the full undergrad years?
    I got to them by mistake and I was so overwhelmed I thought one thing off my plate for the next four years would be worth it. Please fill me in. Thank you for your information.

    • Kay

      Joanna, how are they maintaining paperwork for four years? What paperwork? You must complete the FAFSA every year. Once you complete the application, print a copy and stick it in a notebook, that’s it. Or save it to your computer. It is easy to complete the FAFSA when you have completed your tax return by putting in your social – this is a new feature – the tax information from your return is automatically imported. I do not know Fafsa.com but I cannot see any reason to need anything other than the official site which sends your report directly to the schools of your choice with no fees involved. A potential scam is that you just gave your social and your child’s social to someone???? plus perhaps paid a fee….I would be concerned.

  • Sherry

    I didn’t look at FAFSA.com, but it definitely sounds fishy. If your tax return is finished, the FAFSA is a piece of cake to fill out – mine took literally less than 20 minutes. Why in the world would you pay someone to “maintain” the paperwork, anyway? The figures will probably change every year, due to tax variations, and you can always pull up previous years’ info from the real FAFSA website. Last thing I want is some company having access to my tax info and social security number. Just make it a 1-2 chore every year: tax return and then FAFSA.

  • Patsy Robbins

    Some one has used my name and identification information and applied for a student loan. I have contacted my congressman, several attorneys , the credit bureaus, and a CPA. No one is willing to help me . I did get results from my congressman—I recieved a letter from Sallie Mae stating that there were no student loans in my name with the Department of Eductaion or with Sallie Mae. This has gone on my credit, and it is making my life so difficult. Can you please give me some advise or direction in which I may go next?

    Thank you for your help !

    Patsy Robbins

    • Sarah

      Patsy,

      I’m a consumer credit counselor for a non profit. You can get help by finding an agency near you cccs.org.

      You can also dispute the information on your credit report by going to each of the credit bureau websites or annualcreditreport.com
      Transunion.com
      Equifax.com
      Experian.com

      You can also freeze your credit so it cannot be accessed by anyone. There is a small fee to freeze and unfreeze, but you will have peace of mind. If you need to access credit then you unfreeze it.

    • http://www.Credit.com/ Gerri Detweiler

      Patsy – This sounds like a case of identity theft. Have you obtained a police report and provided it to the credit reporting agencies with your dispute? If not you need to take those basic steps.
      What Should I Do If I’m a Victim Of Identity Theft

  • jeff

    Its been a few years but i believe the F in Fafsa stands for
    Free … don’t pay anyone.

    • http://www.Credit.com/ Gerri Detweiler

      Yes you are correct. It does.

  • Pingback: Why You Should File Your FAFSA Now ← WORLD NEWS

  • Malerie

    is the “student payment relief” a scam?

    • http://www.Credit.com/ Gerri Detweiler

      I don’t know what you mean by that. Can you elaborate?

  • http://www.Credit.com/ Gerri Detweiler

    I just don’t know enough to tell you one way or the other but I am suspicious – there are not a lot of ways to save money on student loan payments, and the ones that exist like Income Based Repayment are free, so what exactly are they offering? I’d suggest you visit GetOutOfDebt.org where Steve Rhode is very good about checking out possible credit scams.

  • Sandra

    Oh my gosh I just talked to these people the other day and I decided to hold off and think about it….. What did they say to your daughter? Did she go through with it??! I’m wondering if I should …

  • http://www.Credit.com/ Gerri Detweiler

    You are welcome!

Find out where you stand.
Get your FREE personalized credit report card.

Sign Up Now
X

Start Maximizing Your Credit Today

Credit ScoreGet a FREE personalized credit check-up today.

Get Started - It's Free!