Promises of Student Loan Relief Can Lead to Big Regrets

Promises of Student Loan Relief Can Lead to Big Regrets

Everywhere we turn these days, Americans are being bombarded with student loan debt relief and opportunities to refinance loans at lower rates.  On the surface, these offers sound enticing especially when many of us struggle to make ends meet.  With inflation at a 40-year high, on average, Americans are paying an extra $250 a month for basic needs items and looking for ways to trim costs.  Reducing or refinancing student loans may sound enticing and like an easy fix but beware, these offers may not be what they seem.

If offers of debt relief or refinancing from a private company seem too good to be true, they probably are. 

These warning signs may help protect you from making decisions you may end up regretting later:

Asking for money upfront for their assistance

There is nothing these companies can do for you that you can’t do for yourself with a little time and effort.

Promises of quick student loan forgiveness

No one person or company can deliver on student loan forgiveness.  Government forgiveness programs have specific requirements that can take years of work on your part to qualify. Find more on the U.S. Department of Education loan forgiveness, cancellation, and discharge programs:  https://studentaid.gov/manage-loans/forgiveness-cancellation

Knowing information about your loan balance does not mean they are legitimate

Scammers can illegally pull your consumer credit file that contains your information.  They use their limited knowledge of you to try to sway your decisions.

Receiving official looking documents that may appear to come from a government agency

Correspondence received by U.S. Mail or by email that appears to come from a government entity can be from a scammer.  Be sure to look for the “GOV” extension on email addresses and websites.

If you are asked for personal information such as an account number or your social security number

Any legitimate entity (government or contractor) will already have this information.

Pressure from the lender to act quickly 

Any lender that is trying to move you quickly through the refinance process is a sign of a predatory lender.  Rushing a quick decision prevents you from reading the fine print and may be a costly mistake.

Asking you to lie or misrepresent your financial situation

No reputable lender will encourage you to lie to get a loan.  These refinanced loans can include additional fees, higher interest rates and loss of government loan benefits.

What to do if you get scammed

  • Turn off any auto debit arrangements that you may be rushed into setting up
    • Contact your student loan servicer to notify them
    • Lock and monitor your consumer credit file with all three reporting agencies:
      • Experian: https://www.experian.com/
      • Equifax:  https://www.equifax.com/
      • TransUnion: https://www.transunion.com/
    • Call your state Attorney General’s Office to file a complaint
About the Author:

Tom Bailey, AFC® is an Outreach Manager at Educational Credit Management Corporation (ECMC).  ECMC is a non-profit that works to lower student loan default rates; sponsors college access and success initiatives, and financial literacy programs; provides resources to support student loan borrowers to successfully repay their loans.