There Are Legitimate Ways To Get Student Loan Forgiveness And Loan Counseling
If you cant afford your student loan payments and need help, there are legitimate ways to reduce your payments or pursue loan forgiveness. Some potential options include:
- Signing up for an income-based repayment plan to reduce your payments
- Exploring forgiveness options with the help of your servicer
- Consolidating your federal student loans into a Direct Consolidation Loan to extend your repayment term up to 30 years
- Refinancing to possibly get a lower interest rate and reduce your overall costs or to extend your repayment term for a lower monthly payment
- Seeking student loan debt counseling through a trusted organization, such as the National Foundation for Credit Counseling
Be sure to thoroughly research your options so you can make an informed decision on how to handle your student loans.
If you decide to refinance student loans, remember to shop around and compare as many lenders as you can. This way, you can find a loan that fits your needs. Credible makes this easy you can see your prequalified rates from multiple, reputable lenders in two minutes.
Just keep in mind that if you refinance federal student loans, youll lose access to federal benefits and protections. This includes access to income-driven repayment plans and student loan forgiveness programs.
Find out if refinancing is right for you
How To Report A Student Loan Scam
If you encounter a deceitful company, file complaints with the CFPB, the Federal Trade Commission and your state attorney generals office. These agencies rely on consumer complaints to police harmful student loan companies and, when possible, get borrowers money back.
Student debt relief companies have popped up because filling out the necessary paperwork can be complicated and time-consuming, Smith says. But if you arm yourself with the right information, youll know how to ask the government for free help and you wont lose money on a scam that could be going toward your debt instead.
If it sounds too good to be true, Smith says, it might be.
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What Do I Do If I’ve Fallen Prey To A Scam
If you already think you’ve been scammed, you can take the following steps to prevent the situation from getting worse.
- File a complaint with the Federal Trade Commission.
- Change your FSA password.
- Reach out to your lender and revoke any third-party authorization or power of attorney agreement you might have previously given your servicer.
- Contact your bank and ask to discontinue any payments to debt relief programs.
Paying For The Help You Need Vs Getting Scammed
If you choose to pay someone for help in completing these forms and you know you have the option to complete them for free, thats fine. But some companies have taken advantage of borrowers who dont understand their options. Theyve charged them for help without explaining the free alternative.
How would you feel if a tax prep company told you the only way to get your tax refund was to pay them to complete and file your tax return? The truth, as most people probably know, is that you can do your taxes yourself for free. You can even file your returns electronically for free if your income is below a certain level if its not, you can file your return by mail for free.
Some people find the process confusing and time-consuming, so they hire a tax accountant, visit their local tax preparation store, or pay for tax software. They might find that the service pays for itself in the time and frustration it saves them, and that they might even owe less in taxesmore than offsetting the tax prep fee they choose to payby getting professional help.
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Free Repayment Options And Loan Consolidation
Likewise, legitimate services exist to help borrowers evaluate their student loan repayment options and apply for the program that best suits their needs. It is possible to make costly mistakes when repaying your student loans.
But to avoid getting scammed, its important to know that paying to apply for deferment, forbearance, or a different repayment plan is optional. Neither the federal government nor the private companies that service on student loans charge borrowers money to request different loan terms.
The same is true of federal student loan consolidation. You can complete and submit the student loan consolidation application yourself for free. Private student loan consolidation does not exist, but you may be able to combine several private student loans into one, and lower your interest rate, with a refinance.
Any loan fees associated with refinancing will not be charged until your loan is finalized and are usually deducted automatically from your loan proceeds. You dont have to pay anything upfront.
Scam #: Filling Out Forms For A Fee
Do you want to lower your monthly student loan payment to an amount you can afford based on your income? You can pay someone to complete an income-based repayment plan request for you, but you can also fill out the application yourself. Income-based repayment application forms are available for free at the official federal student aid website, StudentLoans.gov. The same is true of deferment and forbearance applications.
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Nurse Student Loan Forgiveness
For nurses who serve in hospitals with a critical nursing shortage there are a number of programs to help repay part of your student loans. For students with private student loans the Nurse Corp Repayment program will pay up to 85% of a loan when certain criteria are met .
More> > > Student Loan Forgiveness for Nurses
Youre Asked To Share Sensitive Personal Information
Some companies may ask for borrowers to provide Federal Student Aid IDs or Social Security numbers. The data give the businesses the ability to sign into your account and make decisions on your behalf. Legitimate sources of student loan help, such as NFCC-affiliated nonprofit credit counseling agencies, do not ask for such information.
Additionally, some debt relief companies may ask borrowers to sign power of attorney agreements, which would allow the businesses to communicate with your loan servicer in your name. Youre not obligated to sign such documents in fact, doing so may cause you to lose access to your student loan account.
What to do instead: Dont reveal your FSA ID or Social Security number, or sign a power of attorney agreement. If youve already done so, contact your loan servicer, explain the situation and regain control of your account. Resume making payments directly to your loan servicer if you stopped doing so.
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Red Flags Of A Student Loan Forgiveness Scam
You get a call or text form your lender claiming you qualify for Biden student loan forgiveness or New student loan Grant Forgiveness or some other loan forgiveness program. If you received a call or text from someone claiming to be your lender, even if they know the right name of your lender or student loan servicer as well as other specific information, do not respond.
Reach out directly to your lender to inquire if they have questions or business you need to take care of with them. DO NOT use the number provided in the call or text. Make sure you get their number from a trusted source or from your loan account portal. Never trust just anyone that calls or texts.
The Substance Of Expanded Income
Setting aside the superficial complaints about the name, the substance of the plan is lacking as well.
At this stage, EICR doesnt look like much of an upgrade over the other repayment plans:
- Forgiveness doesnt happen any earlier. LIke the other IDR plans, loan forgiveness will still take 20 to 25 years.
- The marriage penalty still exists. All federal repayment plans charge a marriage penalty of some sort. In the latest draft, spousal income is still used to determine EIRC payments.
The big question to be determined is whether or not EICR will charge less than 10% of a borrowers discretionary income. Candidate Joe Biden called for a plan that charged 5%, which could mean dramatically reduced monthly payments for many borrowers. The exact percentage charged is still in discussion.
Watch for interest subsidy developments: The REPAYE plan was the first plan to help borrowers with interest when their monthly interest was more than the monthly bill.EICR could potentially match or exceed the REPAYE subsidy.
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Want You To Sign A Form Giving Them Power Of Attorney
Companies might ask you to sign a third-party authorization form or power of attorney.
If you do this, youre signing a written agreement that authorizes them to talk to your federal loan servicer and make decisions on your behalf.
A reputable company will never ask you to sign such a form.
They Seek Your Personal Information
Unless youve signed a loan contract, you should keep your private information private. In some instances, you might need to share your Social Security number or your Federal Student Aid ID . This gives companies access to log into and manage your account on your behalf. Only do this if youve vetted the company youre sharing this information with.
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They Say They Can Lower Your Payments
Many student loan companies will tell you that they can lower your payments if you pay them hundreds or even thousands of dollars. What they dont tell you is that you can do it yourself by applying for an income-driven repayment plan or refinancing your private student loans online. Both processes are free, and you can do them entirely on your own.
Promising To Free You From Debt
The thing about student debt, whether a private or federal loan, is that it cannot be totally forgiven unless you fall into one or more qualifying circumstances. More on that below. The majority of borrowers have to pay it off in full, but there are federal programs that can legitimately discharge a portion of your debt. Private companies, however, cannot discharge debt. The minute any private company promises to get rid of your student loans, your best bet is to walk away.
A quick Google search for student loan forgiveness will result in ads promising to DISCHARGE YOUR LOANS TODAY! Its common to see the same thing across social media, from telemarketers, and in junk mail. These are almost always scams. A huge promise of no more debt can be compelling, but like most things that sound too good to be true, this probably is, as well.
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Student Health Forgiveness Scam: How To Report Numbers Like 900
Make your family and friends aware of the Student Health Forgiveness Scam by sharing it on social media using the buttons provided. You can also officially report the scammers to the FTC using the link below:
How to protect yourself more:
If you want to be the first to find out the most notorious scams every week, feel free to subscribe to the Scam Detector newsletter here. Youll receive periodical emails and we promise not to spam.
Last but not least, use the Comments section below to expose other scammers.
The Company Is Asking For Personal Information Or Power Of Attorney
Some scammers will try to convince you to give them your personal information or even power of attorney, as they claim to take care of the forgiveness process for you. Never give your personal information to a company offering to seek student loan forgiveness for you. Not only will they take your money but even if they are, they can use your personal information and steal or sell your identity.
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Can You Get A Student Loan Forgiven
Canadian students with provincial or federal student loans are lucky to have the Repayment Assistance Plan . This program allows the federal and provincial government to share the cost of a loan with the student, who will only have to pay back what they can comfortably afford. While most cases involve reduced payments, students may also have the option of not making any payments during individual 6-month periods.
The problem is that the Repayment Assistance Plan cant actually get your student loan forgiven. Dont worry, because there are several loan forgiveness programs that you can apply for in Canada, including the ones below.
Federal Loans Vs Private Loans
Federal loan rates are usually fixed, and often lower than private loans.
Private student loans can have variable interest rates.
You wont have to start repaying your federal student loans until you graduate, leave school, or change your enrollment status to less than half time.
Many private student loans require payment while youre still in school.
Undergrads with financial need usually qualify for a subsidized loan. The government pays the interest while youre in school on at least a half-time basis.
Private student loans are not subsidized. You must pay the interest on your loan.
Federal loans can be consolidated into a Direct Consolidation Loan for free. Learn about your consolidation options.
Some lenders give options for consolidation, but theres usually a fee.
There is no fee to repay your loan more quickly. Thats called a prepayment penalty fee.
Prepayment penalty fees may apply.
If you have trouble repaying your loan, you may be able to temporarily postpone or lower your payments.
Private student loans may not offer options to temporarily postpone or lower your payments.
There are several repayment options, including options that tie your monthly payment to your income.
Private lenders are unlikely to offer repayment options tied to your income.
You may be eligible to have some portion of your loans forgiven if you work in public service.
Private lenders are unlikely to offer a loan forgiveness program.
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Claiming To Be Affiliated With The Us Department Of Education
While private companies often service debt or act as student loan servicers, there are no third-party debt relief companies that have a direct relationship with the U.S. Department of Education. If a company or scammer tells you they work with the Department of Education, its simply not true, and should be an obvious red flag that puts you on high alert. The Department of Education is independent from private companies. It doesnt offer debt forgiveness through private companies or anything else a scammer may claim.
Illegitimate loan servicers may also place U.S. Department of Education seals on their websites another red flag. Anyone can get the seal and stick it on their website, but that doesnt mean its real.
Minnesotas Debt Settlement Law
Minnesotaâs Debt Settlement Services Act requires companies to register with the Minnesota Department of Commerce before providing services to Minnesota consumers, if the companies provide advice, or act or hold themselves out as acting as an intermediary between consumers and their student loan creditors to reduce the amount of their student loan debt.
The Minnesota Department of Commerce maintains a website of debt settlement companies that have registered with the Commerce Department and are authorized to provide debt settlement services to Minnesota residents. You may access the list of debt settlement service providers registered with the Commerce Department by visiting its website at mn.gov/commerce, clicking on the âLicense Lookupâ link, and selecting âDebt Settlementâ from the drop-down list for license type.
If you have questions about a student loan assistance company, you may contact the Commerce Department as follows:
Minnesota Department of Commerce 85 7th Place East, Suite 280St. Paul, MN 55101
What To Do If You’ve Been Contacted By A Scammer
If you’ve gotten a suspicious phone call, voicemail or even a letter that you think is a scam, you don’t necessarily have to take immediate action if you didn’t respond or give out any personal information.
“You absolutely do not have to do anything, if you didn’t give them any information, you should be OK,” said Haile.
You can, however, report it. One option is to file a complaint with the Federal Trade Commission notifying it of the potential scam. Another is to call your state attorney general.
Last, you may also want to check your credit score out of an abundance of caution, said Evans.
They Promise Instant Loan Forgiveness
When a company promises they can help you achieve COVID-19 forgiveness, its a blatant lie. While the CARES Act suspended payments through the end of January 2021, it doesnt offer loan forgiveness to affected borrowers. If you have federal student loans, your payments will begin again in February, and your balance will remain the same as it was before.
Although there are two loan forgiveness programs for federal student loan borrowers Public Service Loan Forgiveness and Teacher Loan Forgiveness not everyone will qualify, and there is no fee to apply.
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