Watch Out for Student Loan Scams

To keep up with the latest scams and fraud schemes, your BBB® subscribes to newsletters from multiple sources. This warning was just issued by fraud.org on September 1, 2016.

With college costs increasing and financial aid decreasing, students are having to take out loans to help pay for school. This has opened the door to fraudsters taking advantage of students who are not familiar with the loan process. Students are not only cheated out of their money, but their credit is ruined as well.

According to the warning, fraudsters pose as loan counseling services and advertise online and through telemarketing promising immediate debt relief, lowered payments, and debt forgiveness. They charge hundreds of dollars for services that students can get from the government and other approved loan servicers for free. Using high pressure sales pitches, these con artists promise to qualify students for loan forgiveness.

In one case fraud.org received, an Illinois teacher in a low-income district saw an ad on Facebook from a company promising loan forgiveness. He was assured that he qualified for loan forgiveness, so he signed up for the program. He gave the company his Social Security number and paid a fee of $650 and was told to stop paying off his student loans. His actual loan servicer called him a month later and asked why he wasn’t paying on his loan. That’s when he realized he had fallen victim to the scam.

Click here for tips on how to avoid becoming a victim of student debt fraud.