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7 Ways to Avoid College Debt Scams

There are more than 44 million Americans who currently have student loan debt, and for many, these sums are staggeringly high. The average graduate of the class of 2016 carries $37,172 in school debt. It’s not surprising that these students are vulnerable to debt scams that promise relief from this financial burden. Don’t let unscrupulous companies or fraudulent scammers convince you to part with your hard-earned money. Use these smart strategies to protect your funds and manage debt wisely.

Know What You Owe

Your best line of defense against scammers is to have a clear understanding of what you owe. If you’re already aware of all your loans, credit lines, and lenders, you won’t be fooled by false claims that you owe money where you don’t. Many scammers bank on the fact that a lot of college students don’t know how much they owe or who they’ve borrowed the money from.

Keep meticulous records of all your debt. Include the current total, your payoff plan, and the loan holder’s name and contact information. Disregard any communications that don’t align with the information you have in hand.

Manage Your Debt Proactively

Don’t wait for someone to reach out to you about how to best handle your college debt. Stay on top of all your repayment accounts and make sure they’re paid on time. If you’re unable to make a payment, don’t skip it and wait for the lender to contact you. Reach out and make that call yourself. If you contact your lender before you’ve missed a payment, you can often make arrangements to have the loan deferred or your payments adjusted. You’ll always get better results when you make contact first and explain the situation honestly.

Check Out Who’s Calling

It’s very unlikely that a phone call will be the first way you hear of a problem with unpaid debt. Legitimate lenders typically send a written notice long before resorting to phone communications. Don’t fall prey to phone scammers trying to pressure you into making a fast decision about supposed problems with your debt.

If you get a suspicious phone call from someone who claims to have information about your college debt, use a
reverse phone lookup serviceto check out the number. In many cases, this is all you’ll have to do to uncover the caller’s real identity.

Understand How the IRS works

One common scam is callers who claim to be from the IRS, seeking unpaid money that you owe the government. This is a popular approach to getting your money because many college students aren’t fully aware of how their taxes work, or what they owe as a student. File all your taxes in a timely manner each year to make sure you’re on top of anything you legitimately owe to the government. If your taxes don’t reveal any debt to the government, it’s unlikely that you owe anything.

In the rare cases where you have underpaid on your taxes, know that the IRS will contact you by mail first. It’s unusual for the IRS to reach out to you via phone. Nearly all calls that you receive claiming to be the IRS are fraudulent. Note the phone number these come from so you can report the activity to the police.

Request Information in Writing

If you’re speaking with someone on the phone who claims they have information about an unpaid loan, ask them to send you the information in writing. Scammers will pressure you to make a payment immediately, asking for details like your Social Security number and credit card or bank account number by phone. They’re excellent at making you feel harried, confused, and worried. Don’t allow these callers to prey on your emotions. There’s an overwhelming amount of
information about yourself that’s available online. Don’t assume that a caller who knows a few details about you is legitimate.

If you’re concerned that there may be a real problem with your student loan debt, note the name of the lender who’s contacting you as well as any details regarding the issue at hand. Ask for a written statement detailing the current state of your account and end the call. If you do have an open account with the company that supposedly called you, look up their contact information online and give them a call back to confirm the information at another time. You may find that their legitimate offices know nothing about the call you previously received.

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Steer Clear of Third Party Offers

Many college debt scams come in the form of suspicious third party offers. You may hear from a company offering to help you consolidate your loans for a low fee. Another common scam is the supposed law firm offering to settle your debt for less than you owe. Other companies will offer to help you eliminate your debt.

The only company that you should discuss your debt with is the one that provided the loan in the first place. Never trust a third-party business offering you help. You shouldn’t have to pay for loan consolidation, so avoid any offer that comes with a fee. No one, not even a law firm, can help you eliminate or lower your debt. These scammers will take your money, leave your debt untouched, and disappear.

Know What’s Available for Free

Many debt consolidation companies will charge you a fee to perform services that you can get for free. Don’t give in to the convenience of working with someone who took the effort to connect with you. Do your own independent research and turn to reliable resources like the
U.S. Department of Education’s free consolidation servicesbefore paying anyone for similar offerings. While debt consolidation services aren’t always a scam, per se, they are an unscrupulous way for companies to take advantage of an unregulated industry and charge you for something that’s available for free.

Make the effort to stay on top of your finances, so you’re prepared to thwart potential scammers as soon as they pop up. With a few smart tactics, you can protect your money and manage your college debt wisely.

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