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.
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