Student loan consolidation is a real service and tool that can be pretty helpful if used the right way, but there is a problem with it in general. There are countless student loan consolidation scams out there.
Companies are just lurking in the shadows trying to find unsuspecting student borrowers to reel in to their scams and take their money. Most of the time, these student loan consolidation scams will offer consolidation of your loans for a fee that is required to be paid up front. In many cases, they will take the fee and never consolidate the loans for you. Remember this fact at all times. You can actually consolidate your student loans yourself and for free. You should never have to pay a fee for a federal consolidation loan.
As a student debtor, you don’t have the luxury to waste your time and money on a scam! Some of these scams can be spotted a mile away, but others may actually not be as easy to point out. Since plenty of student debtors are scammed each year, it pays to go over some of the red flags for spotting a consolidation scam. Here they are now.
They Ask for Money Up Front
As we stated earlier, most of the scammers will need you to pay something up front to consolidate your loans. After all, the whole point of the scam is typically to make money, so the payment request should be an immediate red flag.
These scam companies are looking to take advantage people willing to pay for someone to figure consolidation out for them. In most cases, these people don’t actually understand how consolidation works, and they’ll most likely be struggling with debt. Scammers are looking to exploit this lack of knowledge and desperation.
Knowledge is the best defense here. Know that there are scammers looking for fees in return for their “services.” Consolidation can be done for free through the Federal government, and you don’t need someone to do it for you!
They Promise Student Loan Forgiveness
Many of the scammers will also promise things that they simply cannot fulfill such as student loan forgiveness. You see these ads all over Facebook and other social media outlets, offering to completely eradicate some of your student loans. Don’t fall for it, it’s a trap! If you are interested in student loan forgiveness, there are some programs out there like the Public Service Loan Forgiveness program set forth by the federal government. These are legitimate programs, but you do have to meet certain qualifications.
They Ask for Personal Information
Any company reaching out to you for your social security number should be treated with extreme suspicion. If someone calls you and offers you a service while requesting personal info, hang up the phone. Companies will ask for your information in order to consolidate student loans on your behalf. In some cases, a scammer may pose as an employee of the Department of Education. Any legitimate company will never ask you for this type of information, and remember that the federal government doesn’t need to call you for your social security number.
They Try Using Pressure Tactics
If you feel pressured in the least bit, then it’s a good idea to just forget about the offer. If they come off like a pushy sales person, then chances are the motivation is not in your best interest. Sometimes they may even make it seem like you have to act now before it is “too late.” This is a tell-tale sign of a student loan consolidation scam. As a general rule of thumb, if they reached out to you in an unsolicited fashion, then you should regard them with suspicion. The legitimate programs that help with consolidation don’t seek you out, you seek them out!
Consolidation may be a great and helpful service to consider, but be sure that you do it carefully. The best way to consolidate is to do it online for free with the government. You may also go with a private lender to help consolidate and refinance your student loans. In addition to giving you one loan with one monthly payment, it would also give you the option to reduce interest rates on your current loans. This will not only make it easier to manage your accounts, but will also help you to save money over the life of your loans.