Beware of Student Loan Debt Relief Companies

If you have student loans, you’ve maybe seen or heard about offers related to student loan debt relief. Maybe you’ve even received some of these offers. While it can be tempting to sign up for these offers, there are some things you need to consider first. You need to learn why to beware of student loan debt relief companies.

What Are Student Loan Debt Relief Companies?

Anyone who is deep in student loan debt—or any kind of debt, for that matter—will know the feeling of desperately wanting to be out of it. The average U.S. citizen carrying student loan debt owes over $37,000. This can be a huge burden to carry around with you, which can lead to missed opportunities and reduced long-term wealth.

Unfortunately, the person with the debt isn’t the only one who knows its onerousness. There are also individuals out there who see other people’s struggles as an opportunity. The combination of hardship and opportunism lead to scams. While not all debt relief is illegitimate, especially those with student loans need to be extremely cautious of any offers.

Why Should You Beware of Student Loan Debt Relief?

There’s more than one reason why you need to beware of student loan debt relief companies. The first of these reasons has already been mentioned—the high likelihood that a student debt relief company is actually a scam. These are some of the things you should look out for when determining if a company is attempting to scam you with a debt relief offer:

• They’re pushing you to make a fast decision. You should always take your time when making financial moves—especially one that affects something as significant as your student loans. Be suspicious of any organization that pushes you too hard toward making a fast financial choice. This is often a telltale sign of a scam, or at least a service that won’t really benefit you.
• They make unrealistic but enticing claims – Any offers for full discharge or elimination of your student loans through a debt relief program are not true. Think about it: What would the debt relief company really gain through you eliminating your student loan? It’s possible there might be some kind of caveat, where your student loans are paid off and you’re left with an even more onerous form of debt, while also having to pay a fee to the company. But this isn’t a beneficial scenario for you. Generally speaking, when something sounds too good to be true in the financial realm, it’s best to turn around and run, not walk, away.
• They’re cold-calling you – There are essentially no situations in which someone offering a great financial product is going to call you out of the blue and save you a bunch of money. There’s no such thing as a free lunch in life—meaning you’re going to at least have to do some amount of legwork if you expect to find a good deal. While the most reliable student loan offers are going to be well advertised, they’re not going to seek you out. Anytime someone is calling you and saying they can help with your student loans, it’s bad news.
• They ask for upfront payment – There’s no situation in which you should be paying for services related to your student loans. If you go with a student loan refinance through a private lender, there’s no fee for taking out the new loan. This is a feature that makes refinancing student loans such a great deal compared to some other kinds of refinancing, which typically come with loan origination fees. You might wonder what is refinancing a student loan. It’s an easy and smart process where you get a new loan with better terms, which entirely replaces your old one. This is just further proof, however, that anyone asking for you to pay fees is a bad sign.
• Things look sloppy – A professional lending organization will pride itself on accuracy. Lenders won’t stay in business long if they cut corners. The good ones know this, and so strive for high standards in order to preserve and grow their capital. Anytime you get materials from a student loan debt relief offer that’s full of mistakes, you can absolutely guarantee it’s a fraud. Even if they were legitimate, would you really want to put any amount of trust in an organization that doesn’t care about communicating a positive image?

These are just some of the top things that can tip you off to a student debt relief scam. But what if you’re struggling with student loan debt and you don’t know how to deal with it? There are some legitimate options that will be a much better choice.

What Are Alternatives to Student Loan Debt Relief?

Since you now know to avoid student load debt relief scams, you have to find a better alternative to solve your debt issues. Those who want to lower their monthly payments are likely going to have to refinance their student loans.

As mentioned earlier, refinancing is the process of taking out a new loan to replace your current one. This is a common practice that’s done with loans of all kinds. This allows you to get a better interest rate or change the repayment term.

It’s important to note, however, student loan refinancing can only be done through a private lender. The federal government offers loan consolidation, but not refinancing options.

There’s nothing wrong with working with a private lender. When you have certain kinds of federal loans, you can often lower your interest rates and monthly payments through refinancing. While getting a lower rate is certainly beneficial, there are some other things that happen when you switch from a federal to a private loan.

Things like income-based repayment plans and forbearance aren’t typically included in private loans. These have been hugely helpful for many people, especially during the Coronavirus pandemic. At the same time, some people might want to lock in a lower interest rate either way while they’re still low. Deciding whether to refinance will depend on your individual situation.

Student loan debt relief scams are really a sad reality of our times. While it’s unfortunate people would participate in such a low activity, it’s still essential to stay aware and protect yourself.

Beware of Student Loan Debt Relief Companies

If you have student loans, you’ve maybe seen or heard about offers related to student loan debt relief. Maybe you’ve even received some of these offers. While it can be tempting to sign up for these offers, there are some things you need to consider first. You need to learn why to beware of student loan debt relief companies.

What Are Student Loan Debt Relief Companies?

Anyone who is deep in student loan debt—or any kind of debt, for that matter—will know the feeling of desperately wanting to be out of it. The average U.S. citizen carrying student loan debt owes over $37,000. This can be a huge burden to carry around with you, which can lead to missed opportunities and reduced long-term wealth.

Unfortunately, the person with the debt isn’t the only one who knows its onerousness. There are also individuals out there who see other people’s struggles as an opportunity. The combination of hardship and opportunism lead to scams. While not all debt relief is illegitimate, especially those with student loans need to be extremely cautious of any offers.

Why Should You Beware of Student Loan Debt Relief?

There’s more than one reason why you need to beware of student loan debt relief companies. The first of these reasons has already been mentioned—the high likelihood that a student debt relief company is actually a scam. These are some of the things you should look out for when determining if a company is attempting to scam you with a debt relief offer:

• They’re pushing you to make a fast decision. You should always take your time when making financial moves—especially one that affects something as significant as your student loans. Be suspicious of any organization that pushes you too hard toward making a fast financial choice. This is often a telltale sign of a scam, or at least a service that won’t really benefit you.
• They make unrealistic but enticing claims – Any offers for full discharge or elimination of your student loans through a debt relief program are not true. Think about it: What would the debt relief company really gain through you eliminating your student loan? It’s possible there might be some kind of caveat, where your student loans are paid off and you’re left with an even more onerous form of debt, while also having to pay a fee to the company. But this isn’t a beneficial scenario for you. Generally speaking, when something sounds too good to be true in the financial realm, it’s best to turn around and run, not walk, away.
• They’re cold-calling you – There are essentially no situations in which someone offering a great financial product is going to call you out of the blue and save you a bunch of money. There’s no such thing as a free lunch in life—meaning you’re going to at least have to do some amount of legwork if you expect to find a good deal. While the most reliable student loan offers are going to be well advertised, they’re not going to seek you out. Anytime someone is calling you and saying they can help with your student loans, it’s bad news.
• They ask for upfront payment – There’s no situation in which you should be paying for services related to your student loans. If you go with a student loan refinance through a private lender, there’s no fee for taking out the new loan. This is a feature that makes refinancing student loans such a great deal compared to some other kinds of refinancing, which typically come with loan origination fees. You might wonder what is refinancing a student loan. It’s an easy and smart process where you get a new loan with better terms, which entirely replaces your old one. This is just further proof, however, that anyone asking for you to pay fees is a bad sign.
• Things look sloppy – A professional lending organization will pride itself on accuracy. Lenders won’t stay in business long if they cut corners. The good ones know this, and so strive for high standards in order to preserve and grow their capital. Anytime you get materials from a student loan debt relief offer that’s full of mistakes, you can absolutely guarantee it’s a fraud. Even if they were legitimate, would you really want to put any amount of trust in an organization that doesn’t care about communicating a positive image?

These are just some of the top things that can tip you off to a student debt relief scam. But what if you’re struggling with student loan debt and you don’t know how to deal with it? There are some legitimate options that will be a much better choice.

What Are Alternatives to Student Loan Debt Relief?

Since you now know to avoid student load debt relief scams, you have to find a better alternative to solve your debt issues. Those who want to lower their monthly payments are likely going to have to refinance their student loans.

As mentioned earlier, refinancing is the process of taking out a new loan to replace your current one. This is a common practice that’s done with loans of all kinds. This allows you to get a better interest rate or change the repayment term.

It’s important to note, however, student loan refinancing can only be done through a private lender. The federal government offers loan consolidation, but not refinancing options.

There’s nothing wrong with working with a private lender. When you have certain kinds of federal loans, you can often lower your interest rates and monthly payments through refinancing. While getting a lower rate is certainly beneficial, there are some other things that happen when you switch from a federal to a private loan.

Things like income-based repayment plans and forbearance aren’t typically included in private loans. These have been hugely helpful for many people, especially during the Coronavirus pandemic. At the same time, some people might want to lock in a lower interest rate either way while they’re still low. Deciding whether to refinance will depend on your individual situation.

Student loan debt relief scams are really a sad reality of our times. While it’s unfortunate people would participate in such a low activity, it’s still essential to stay aware and protect yourself.