Watch for Warning Signs of Student Loan Company Scams

America is finally recognizing the challenge many face with education debt. With challenge comes opportunity, and there have been dozens of new services appearing that purport to help borrowers with their student loans.
Many of these are great resources, but just like anything else, there are a few bad apples with offerings closer to scams than services. So it’s important to be able to tell the difference and know where borrowers can go for help with their education debt. Here are three warning signs to look out for when evaluating student loan services.
1. Promising loan forgiveness and extremely low payments: While there are many lower payment and forgiveness options available, especially for federal student loans, they are all strictly regulated and you have to be eligible to benefit from them. Simply put, there’s not a person on the planet that can get you a better option than you can get for yourself by working directly with your loan holder.
Also, beware of companies that want to change the contact information on your account to their own. Even if you choose to have someone help you manage your loans, you should always ensure you are fully aware of the status of your student loan accounts.
2. Claims to be able to get you out of default for a fee: Other than paying the loan in full, you can get your federal loans out of default in two ways: rehabilitation or consolidation. You have to make some payments to be eligible for either, but the loan holder is required by federal regulation to work with you to ensure those payments are affordable. And while a defaulted loan incurs collection costs no matter what – at an amount that is, again, federally regulated – there’s never a fee for taking advantage of either of these options.
To be clear, the Student Loan Ranger isn’t saying that all companies that charge a fee for help with student loans are a scam. But just like any other service you would pay for, such as getting help filing your taxes, that fee should be a reasonable amount and the terms of the service and expected outcome should be clear to the consumer from the outset of the relationship.
3. The logo and name look similar to a well-known student loan provider or the federal government: A troubling number of companies are popping up with logos very similar to the U.S. Department of Education’s tree logo, as well as others with names one or two letters off from well-known student loan servicers. If a company has to fool its customers into thinking they’re someone else to get them to buy their product, it might be time to evaluate the quality of that product.
If you’re still not sure, search the Web and the Better Business Bureau for consumer reviews based on the company’s website.
The first place you should go if you need help with your student loans is your loan holder. Not only will they be well versed in the rules, regulations and benefits associated with the type of loans you have, but they will also have access to your actual loan details and can therefore give you more targeted advice.
Your loan holder or servicer will never charge you for a consultation and your federal loan holder and most private loan holders will also never charge you to apply for lower payment, deferment, consolidation or other options. Just remember those collection costs on defaulted loans that were mentioned earlier.
If you want a second opinion or have had a bad experience with your loan servicer, try self-service. The U.S. Department of Education is a great informational resource for your Education loan.
There are also a number of nonprofit organizations with years of expertise in the loan programs that have developed easy-to-use and understand sites and tools. These services also have counselors available by phone and chat to answer any questions you might have along the way, and many of them are free or charge only minimal fees.
Source: https://www.evernote.com/shard/s647/sh/90284af8-727a-422b-ae2b-d3583e319fd2/a6656ff40322a4300906cdf888e6808a