“Obama signs bill forgiving all student loan debt,” declares one headline. “Wipe away all of your student loans completely,” another may promise.
Optimistic posts like these are rampant on social media. People share them in the desperate hope that there’s a new program that will magically eliminate their loans. However, most of them are scams or companies that take advantage of borrowers in debt.
There are over 44 million student loan borrowers in the United States today. With such a large audience, it’s no wonder that student debt relief scams have popped up to prey on graduates struggling with debt.
Many of the claims look real and sound professional, so it can be difficult to identify student loan scams. Fraud-debunking website Snopes can help consumers evaluate legitimate offers from fraudulent ones.
Student loan scams according to Snopes
Snopes is a well-known website that specializes in researching and evaluating prevalent internet claims. From debunking urban legends to evaluating alleged weight loss miracles, Snopes helps separate fact from fiction.
Here are three of the biggest student loan hoaxes and misconceptions identified by Snopes — and how you can spot student loan scams for yourself.
1. President Obama created a program to forgive all student loans
This story is one of the most prevalent student loan myths out there.
In 2014, Empire News ran an article that said then-President Obama had signed a bill forgiving all student loans taken out over the past 10 years. According to the story, the program would also forgive all loans taken out in the future.
The article was shared thousands of times on social media and took on a life of its own. Many borrowers were relieved and thought they were becoming debt-free overnight.
However, Empire News is a satire site that posts hoax stories and parody content. There was no truth to the news article at all.
Bottom line: This myth continues to pop up on many social media platforms, but there is no bill that eliminates all past and current student loans. However, you may be able to get forgiveness or repayment assistance through state or federal programs.
2. Disabled? Call this number to get your loans discharged
Another faux news story appeared in 2016, claiming that hundreds of thousands of student loan borrowers could get their loans forgiven if they had a disability. It even featured an actual image from the U.S. Department of Education about how many people might be eligible.
However, the article directed borrowers to call a phone number that connected them with a private company not affiliated with the Department of Education. When customers were connected with a representative, they were told they had to pay high fees to process the discharge.
Bottom line: Many companies use this same approach — posing as a federal entity or pretending to be contracted by the government — to attract customers. Though you can actually get your loans discharged if you’re disabled, you don’t need to pay for that service.
If you have a permanent disability that prevents you from working, you may be eligible for total and permanent disability discharge for your federal student loans. You can apply for the discharge by submitting your application directly to the Department of Education, not an external company. It’s free to do.
You can get more information about the discharge process and how to apply on the Department of Education’s website.
3. You’ll get arrested for falling behind on student loan payments
In 2016, a story began circulating on social media that alleged a man named Paul Aker was arrested for defaulting on his student loan payments.
But that’s not what really happened. Aker was arrested, but not for falling behind on his payments; he was arrested for failing to appear in court. The government sued Aker back in 2007 for his unpaid loans, reported CNN. When he didn’t show up at court, the judge ordered him to repay the full balance.
Aker did not make the required payment, so after failing to appear in court again despite multiple attempts to contact him, the judge issued a warrant for his arrest.
Bottom line: You can’t be arrested for simply missing your loan payments. The only way you’ll get arrested for your student loans is if you are required to appear in court and refuse to do so.
However, defaulting on your loans does have serious consequences. Your credit could be ruined, and the lender can garnish your wages or even sue you.
How to identify student loan scams
There are many companies out there that claim to help you with student loans. However, many of them charge fees for things you can do yourself.
If you are looking to consolidate or refinance your loans, for example, there are two legitimate ways to do so. You can apply for a Direct Consolidation Loan with the federal government or apply for private refinancing with an independent company. Neither will charge you upfront fees.
If you can’t tell whether a company is legitimate or not, ask yourself these questions:
- Are they asking for money? Some services will apply for refinancing or consolidation on your behalf, but they charge a huge commission for doing so. In some cases, the cost can add hundreds or even thousands to the cost of your loan. That’s a waste of money since you can do those things for free.
- Is there an application fee? Neither the federal government or legitimate private banks charge an application fee for consolidating your loans.
- Does it sound too good to be true? If a service promises to eliminate your loans or cut your balance in half, consult your gut. If it sounds too good to be true, it probably is.
- Are they asking for personal information? Some scams are just out for your personal information to steal your identity. They’ll promise to reduce or eliminate your loans in exchange for your Social Security number or other information. If a company asks these questions, move on.
Avoiding student loan debt relief scams and managing your loan
Social media is filled with student loan offers and viral posts promising debt forgiveness. However, these programs just don’t exist. Before handing over your credit card or personal information, do your homework to avoid becoming a victim.
If you need help signing up for an income-driven repayment plan or federal student loan consolidation, or you want to refinance your loans, there are plenty of free resources that explain how to do it yourself. With proper research, you can take charge of your debt — and keep more of your money.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|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 3.36% APR (with Auto Pay) to 7.82% APR (with Auto Pay). Variable rate loan rates range from 2.41% APR (with Auto Pay) to 6.99% 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 April 17, 2019, 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 04/17/2019. 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 our student 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 SoFi.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed 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.
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.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
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 2.45% effective May 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.41% – 6.99%1||Undergrad & Graduate|
|2.41% – 7.89%2||Undergrad & Graduate|
|2.43% – 6.65%3||Undergrad & Graduate|
|2.38% – 6.81%4||Undergrad & Graduate|
|2.41% – 8.19%5||Undergrad & Graduate|
|2.60% – 9.60%6||Undergrad & Graduate|