NEW YORK, November 1, 2022 (Newswire.com) - Now that President Biden's student loan forgiveness option is available, many people are wondering if it's worth pursuing it, as working with bureaucracies like the federal government can seem like a headache.
Unfortunately, there are many scams out there trying to take advantage of people who are thinking about this option. Here's what you need to know and how to prevent yourself from getting scammed.
Why would scammers target student loans?
Unlike other student loan alternatives, education loans are one of the toughest debts to get rid of. They rarely qualify for outright forgiveness and cannot be written off with bankruptcy.
Consequently, many scammers see this as an opportunity to take advantage of desperate people. Now with student loan forgiveness available for a limited time, people looking to rip off well-intentioned but naive debt holders are at a critical level.
Common student loan scams
There are a few scams that you may run into when looking into student loan forgiveness.
The most common is the "loan forgiveness scam." This is when someone tells you that you can get your entire student loan forgiven quickly, usually within a couple of months. However, this is almost never true. To get your loan forgiven, traditionally, you must go through a process that can take many years and require a lot of paperwork.
President Biden's student loan forgiveness program removes these barriers for a limited time. Once his forgiveness program is over, getting your student loan debt absolved will go back to the complicated process it once was.
Another common scam is the "secret student loan forgiveness program." This is where someone will contact you and tell you that they work for a secret program that can immediately forgive your entire student loans.
How can I avoid being scammed?
Here are some tips to help you identify and avoid student loan forgiveness scams:
1. Refer to government websites for the most up-to-date information - Many scammers will offer information that is not officially sanctioned by the government and will direct you to sales pages set up just to take your money. Legitimate organizations like the Department of Education (DOE) will always have the most up-to-date information.
3. Avoid extraordinarily long and complicated contracts - Many scammers will try to get you to sign an agreement that is overly long and difficult to understand. Contracts like this often contain hidden terms that can lead to unexpected financial obligations later.
4. Be suspicious of anyone who offers a free trial, or money-back guarantee - These are common signs that a scammer is trying to take advantage of you.
5. Don't pay for advice - Many schemes involve paying a consultant or "debt advisor" in order to get started on the forgiveness process. Legitimate credit counseling services are often not-for-profit and can provide impartial advice that's low-cost or even free. Don't let anyone pressure you into making any payments before you know anything about the options available to you.
6. Be wary of offers that seem too good to be true - Many schemes promise student loan forgiveness in just a few short months or even weeks, but don't fall for promises that are too good to be true.
The bottom line
Although student loan forgiveness scams are rare, they are becoming more popular thanks to the federal student loan forgiveness program happening now. Being aware of the warning signs and taking preventative measures can help you avoid being scammed and get the relief you deserve.