“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 2018!
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