Educating on: Student Loan Scams

I talked about my journey to financial freedom (aka navigating away from adult brokeness) a little in my article about ThredUp. A lot of people had questions about my experience and how the site worked so I figured I could share some more gems in my next few articles. Since April is Financial Literacy Month, what better way to start than by sharing what I do daily?

I work full-time as a Financial Literacy Coordinator. What does that mean? I counsel students on their student loan repayment options, scam awareness, and general financial wellness topics like budgeting and credit scores & reports. That is not to say that I am in the least bit perfect or have my sh*t together when it comes to these topics. But I am working on it!

One of the biggest questions I get asked by students/alumni is:

“What about Obama’s Student Loan Forgiveness Program?”

My manager likes to call this my “soapbox” because I’m very passionate about this part (partially because I work for the FBI in my mind). But the answer is simple: IT DOES NOT EXIST! What do I mean? Well it’s really simple. The program was never created. Then why do you see ads for it? That’s simple too. Companies understand that students want the easy way out of debt so the prey on students by making them believe in a program that actually doesn’t exist (this is the scam awareness part). If you notice these companies almost never say their name in a commercial but they always list a phone number.

These companies are also reaching out to students through emails, calls, texts, mailed letters, and even through your friends. They try to reach you when you’re the most vulnerable like after you graduate or through a “reliable source.” And that’s not to say your friends or family aren’t trustworthy or are knowingly scamming you. It just means we tend to have our guard down when something comes from someone we consider reliable.

Being that I am a recent-ish graduate (May 2014 was almost 3 years ago…yikes!) I have come in contact with a few of these companies personally as well as on the job. I will give you 2 examples of what I have seen (outside of commercials):

1. I received 2 letters in the mail. Red flag 1: neither one had a company name on it. Red flag 2: they both stated that I owed way more in federal student loan debt than I actually have. Red flag 3: they both stated final notice and came in unmarked envelopes. One even said “Final Notice” very big at the top. Red flag 4: there was a very small disclosure at the bottom that stated that the company was not affiliated with a government agency or lender.
2. Someone I know made a post on Facebook about how a woman helped them save $30,000 on their student loan debt. They encouraged their friends to reach out to the person so that the same can be done for them. The biggest red flag in the post for me was the amount of money saved. Let’s be real….we all know the government wants their money so why would they just forgive $30k without anything in return? The other red flag was that they mentioned Obama’s Student Loan program which, as I said earlier, does not exist. We actually called the company to see what it was about and turns out they’ll reward you if you refer your friends.

So what are the best ways to deal with these companies? Simple: RUN AT ALL COSTS!!! Just kidding. But you should try your best to avoid them. Start by being cautious and never giving out personal information to a company you did not contact. You should also make sure you know your loan information (i.e. who your lender is, how much you owe). If you have questions your lender should be able to help. Another big red flag is if the representative is avoiding your questions. And always be careful because if you have entered into a binding contract with one of these scamming companies you may not be able to reverse it. Last but not least stop trying to take the easy way out. Although it would be AMAZING to have all of your student loans forgiven it is not likely. Look into affordable repayment plans, Public Service Loan Forgiveness, and responsible ways to lower your debt. ‘Tis better to make the payments than to be stuck in a deeper hole of debt!