Student loan forgiveness is a popular topic right now. Unfortunately, some of the 43 million Americans with student loan debt are falling victim to student loan forgiveness and consolidation scams. Over the last couple years, the student loan industry has been infected by greedy telemarketers looking to take advantage of struggling student loan borrowers.
Have you heard a radio ad for student loan forgiveness recently? Did the advertisement promise fast and easy forgiveness of your student loan debt? Did it sound too good to be true?
These ads have been showing up everywhere recently and unsuspecting Americans are getting taken advantage of. The facts behind student loan forgiveness programs are getting lost in a clutter of Facebook ads and late night television commercials.
Student loan forgiveness is real. But unlike the advertisements and commercials say, not everyone will qualify. The scam works like this. You will get an email or hear an advertisement from a company claiming to help you erase your student loan debt. These scammers commonly claim that their student loan forgiveness program is made possible by new government legislation or by President Obama. When you get to the company’s website you may even see pictures of Congress, the White House, American Flags, and President Obama himself.
At this point, you will be instructed to fill out a form and a representative will call you. These companies hire talented telemarketers who ask for an upfront fee to help you negotiate with your student loan lender. The company will ensure you that they’ve helped hundreds of student loan borrowers like yourself escape student loan debt. After you’ve paid the fee, these scammers will take your money and run. At the end of the day, most people will not qualify for student loan forgiveness and they could not have helped you any way.
There is even another version of this scam pushing federal student loan consolidation. These same telemarketers are claiming that they can help you save money by consolidating your student loans. After charging an upfront fee, these companies will file Direct Consolidation Loan paperwork on your behalf. In effect, these scammers are charging consumers to use a free government service and they are lying. The Federal Direct Consolidation Loan does not help consumers save money. In reality, when you consolidate federal student loans through the Department of Education, you will end up paying a weighted average interest rate that offers no savings.
In short, you should never:
- Pay an upfront fee for student loan forgiveness.
- Pay an upfront fee for federal student loan consolidation.
- Give a 3rd party telemarketer power of attorney. It doesn’t matter how many bald eagles they have on their homepage. They aren’t working with the Department of Education.
The most popular student loan forgiveness program is called the Public Service Loan Forgiveness Program. This program was infact announced by President Obama in 2007. The Department of Education offers federal student loan forgiveness to individuals who have made 120 qualifying loan payments and have worked in a public service job for 10 years. When the application goes live in 2017, it is extremely unlike that there will be any fees associated with the program. There are State specific student loan forgiveness programs available. This guide highlights all of the State specific student loan forgiveness programs available today.