Student loan borrowers often receive student loan debt relief letters in the mail, and may be desperate for a way to get some relief from paying their student loans. But borrowers beware: Some college debt relief letters could be scams, eager to charge you outrageous fees if you sign up with them.
Here’s more information about what these letters often look like, and different ways to find out whether a college loan debt relief letter is a legitimate offer or not.
Signs your student loan debt relief letter might be a scam
1. You’ve never heard of the company or program.
When it comes to federal loans, you should be dealing with your student loan servicer or getting your information from the Federal Student Aid website, run by the US Department of Education. For private loans, you should be dealing directly with your servicer regarding any programs they have available, which should be clearly explained on the servicer’s website.
If the letter is from a third-party company that you’ve never heard of or references a program you’re unfamiliar with, be suspicious and skeptical about their college debt relief offers.
2. You’re pressured to “act fast” or told that this is a limited time offer.
While there are deadlines associated with recertifying income-based repayments on an annual basis, you are made aware of these deadlines well in advance and are responsible for adhering to them.
However, legitimate programs should always be available to those who qualify. Companies that contact you to say that an offer will only be available for a limited time are almost always scams.
3. You are asked to pay a fee up front for services.
Applying to consolidate your federal loans is always free. Any company that attempts to charge you for the service is not legitimate. While some private companies may charge you to refinance your student loan debt, many do not — and those who do will charge any fees at closing, not during the application process.
4. You’re told your student loan balance can be canceled or reduced.
The only way to reduce your student loan balances is to make payments on your loans.
While some federal student loans may be eligible for forgiveness, there are strict criteria for participating, and the balance is forgiven once those criteria have been met — not at the time of a refinance. Any company that promises that they can reduce the amount that you owe is almost certainly lying.
5. The email or letter looks like an advertisement.
A legitimate letter will come in an envelope, have a letterhead, and clearly outline terms of eligibility without any pressure sales or fancy gimmicks. The use of postcards, excessive exclamation points, and hyperbolic language are all potential red flags.
6. You’re unable to find reviews of the company and its services.
Student Loan Hero offers brief overviews as well as in-depth reviews of many reputable student loan refinancing companies. Similar reviews are also available from other sources.
If you’re considering refinancing your student loan debt, you should be able to easily obtain as much information as you need to feel comfortable entrusting them with your financial information. Determining whether a company has Better Business Bureau (BBB) accreditation is another way to put your mind at ease regarding an organization’s legitimacy.
7. The organization is a for-profit entity.
While this is not always the case, companies operating for profit may have their best interests in mind, rather than yours.
To be sure you’re not just padding some corporation’s bottom line, a student loan debt relief letter that indicates it is from a nonprofit entity may help put your mind at ease. Be sure to independently verify the organization’s status rather than just taking their word for it.
Don’t wait until you’re desperate to seek help with your student loans
One of the reasons companies running student loan debt relief scams are able to stay in business is that they approach those who are scared or desperate for relief from student loan debt.
If you’re overwhelmed, one of the best things you can do is to be proactive. This means contacting your student loan servicer as soon as you are experiencing challenges with the repayment process.
Often, there is a lot that your current servicer can do to help you get your payments under control without having to resort to another entity, particularly if you have federal loans.
Even if your current servicer does not have a program that is a good fit for you, the sooner you know that, the sooner you can begin to compare and contrast the offerings of legitimate student loan refinancing companies so you can seek relief from student loan debt.
By initiating the process yourself and conducting your own research rather than waiting for a company to contact you, you stand a better chance of not only ending up with a legitimate student loan debt relief company, but of finding a program that it will be a good fit for your current financial needs.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|