The best way to avoid student loan scams is to learn how they work and know what signs to look for. “It’s all about trust,” says Daniel Pianko, managing director of the University Ventures Fund. “If something seems too good to be true, it probably is.” He suggests reading up on the latest news related to student loans and talking with other borrowers who can share their experiences — both negative and positive — with lenders. Student loan forgiveness scam calls are way up high, and here are four common types of student loan scams:
1) Identity theft: You apply for a student loan online or give your information at a high school fair only to find out someone else has used your identity to take out additional loans. To prevent this type of fraud, always keep your Social Security number and other personal information private.
2) Promises of loans with unusually low-interest rates: You may be tempted to fill out loan applications that promise a super-low 0 percent interest rate, but it’s too good to be true. If you come across any type of student loan offer online — even if it promises no fees — do some research before submitting your information, or you could end up in debt.
3) Bogus websites: Countless websites promise federal student aid, but they aren’t all legitimate. Some sites might require payment for resources such as “sample application forms” or access to a “student loan calculator.” Others might ask for your login details so the company can collect data from potential customers or lead you to a website that looks similar to the official one. Beware of these schemes.
4) Upfront fees: Student loan companies sometimes charge you an upfront fee for consolidation, applications, or advice services they claim are free under federal student aid programs. Companies can’t require you to pay any money out-of-pocket to get federal student loans or grants. And some states specifically prohibit schools from charging fees for loan applications and other services.
The best way to avoid student loan scams is to be aware of how they work and what signs you should look for when it comes to student loan scams. If something promises a super-low interest rate or tells you that you don’t need out-of-pocket money for your application, be cautious before submitting your information. To protect yourself, always check your credit report to know which lenders have accessed it.