It’s common for students to take out loans to pay for their education. These students may come into contact with companies that promise to lower their monthly student loan payments or help them find relief from their student debt. Unfortunately, some of these companies may scam those with student loans rather than help them.
If you have student loans, it’s important to make yourself aware of the common student loan repayment scams listed below. In the event you are a victim of a student loan repayment scam, contact our highly skilled Cleveland student loan attorneys at Cleveland Bankruptcy Attorneys. Call us at (216) 586-6600 today.
Advanced Fee Scam
An advanced fee scam occurs when a company states they can get you the best interest rate and loan terms in exchange for a small upfront fee. This fee can be 1 to 5 percent of your total loan amount. Since you should never have to pay money to get money, stay away from this type of offer. Understand that student loans do not require any upfront fees, even if they are from private lenders.
The only types of legitimate fees that come with student loans are default fees for federal loans and disbursement or origination fees for private loans. A company that claims they can help you with your student loan debt should never require an upfront fee unless it goes into a third party or escrow account. It’s important that you completely understand a third party company’s pricing and payment structure before opting for their service.
Loan Consolidation Scam
If you have multiple student loans and hope to simplify your payments, consolidating your loans may be a good idea. Loan consolidation can allow you to make one single payment on a large loan rather than multiple payments on several loans.
Sadly, loan consolidation scams are common. The most common type of loan consolidation scam is when a company asks for a consolidation fee but takes no action in return. This fee may be referred to as an administrative fee or processing fee. If you have federal student loans, you can consolidate them at no charge by visiting StudentLoans.gov.
Law Firm Lawsuit Student Loan Scam
In a law firm lawsuit student loan scam, a law firm will tell you they can settle your student loan debt. This scam involves a borrower who is known as a “student aid company,” which promises that a law firm can settle your student loan for thousands of dollars less than you owe. The law firm may ask you to pay for as much of your student loan as you can to them directly. They’ll claim that once you do so, they’ll work with your lender to negotiate a settlement. Unfortunately, the law firm may not make any payments while they negotiate with your lender and cause you to go into default. Then, the law firm will state that you are unable to pay your bills and use that to negotiate a settlement.
If you become a victim of a law firm lawsuit student loan scam, you could end up paying thousands of dollars to a law firm and ruining your credit history. Even if you get lucky and are able to settle your loans, the process can take years and still leave you with a settlement.
Red Flags to Watch For
If a company is trying to scam you, one or more of these red flags are typically present:
- The company states they are affiliated with the Department of Education.
- The company promises you forgiveness or a set payment despite the fact that your income may change.
- The company promises that they can forgive or cancel your student loans right away.
- The company states that they will buy your loan and settle it for a set amount.
- The company informs you that since you since your college or university is being sued, you qualify for forgiveness.
Contact Our Cleveland Student Loan Attorneys Today
If you believe you are the victim of student loan repayment scam or are wondering whether you can get your student loan debt discharged, reach out to our Cleveland student loan attorneys at Cleveland Bankruptcy Attorneys today. We’ll inform you of your options and may be able to help you find relief. Contact us at (216) 586-6600 today.