There are lots of ways people will attempt to charge you fees for student loans. Almost all of these are completely unnecessary. These come in a wide array of presentations, from simply charging you for something that should be free to consumers, to outright scamming you. It’s important for you to be aware of each kind of these tactics. You don’t have to pay for help with your federal student loans, and there are ways to avoid doing so.
Is someone trying to charge you fees for basic student loan services?
If you’re looking for services related to your student loans and someone is attempting to charge you for them, definitely take a step back before going through with anything. The vast majority of what you might need to do related to student loans can be done for free. These are a few of the ways organizations will attempt to get you to pay for things related to student loans:
- Financial aid services – There are agencies that offer to help potential students find financial aid for school. You don’t need assistance in order to find financial aid, this information can be found for free through government websites. While it’s not technically illegal to charge consumers for things that they can get for free, you shouldn’t opt for these services either way.
- Filing paperwork – You might be more inclined to pay a company for services if it involves filing paperwork—such as documents related to the FAFSA. Even though it can seem like this is a necessary practice—and the representative might be pushy in getting you to agree—you don’t need to pay for this. You can get all the materials you need from the Federal Student Aid Information Center and your prospective colleges.
- Adjusting your federal loans – If you’re considering working with a student loan debt relief company, think again. While some of these organizations are legitimate, they’re not particularly necessary. Most services offered by a debt relief company can be done through your loan servicer with no charge.
These are a few of the more common situations where a company might try to act as an unnecessary middleman in order to skip some funds; but there are other situations student loan borrowers need to look for as well. Whenever you’re dealing with your finances you need to be aware of people and organization that might try to take advantage of you. Beyond being simply charged for services, these are a few student loan scams you should have on your radar:
- Someone is asking for lots of identifying information – Whether it’s your FSA ID and password, social security number, bank accounts, or anything else, just hang up and walk away if anyone is asking for information like this. A legitimate agency or representative won’t ask you for your FSA password. Furthermore, these other personal-identifying numbers aren’t going to be needed except in certain situation. Any group asking for these upfront like it’s no big deal is probably attempting to defraud you.
- Debt relief scams – Student debt relief was mentioned earlier as something that’s not typically necessary for those who want to improve their monthly payments or other metrics. While these aren’t going to harm you beyond simply losing a bit of money, there are also debt relief scams that can be far more dangerous. If you receive unsolicited offers that sound too good to be true, they’re just that—too good to be true.
- An individual posing as any kind of student loan officer – There’s no limit to how criminals might pretend to be someone else in order to take your money. If you’re contacted out of the blue about loan forgiveness or discharge, this is almost certainly a scam. Fraudsters only need to catch you in an emotional moment to be able to use your personal information against you. Be careful to not fall into these traps.
As if there wasn’t already enough to think about with your student loans, borrowers need to pay attention in order to avoid paying unnecessary fees—or even getting scammed. While communicating with the education department and your loan servicer can be helpful for certain things, it’s not going to cover it all.
How to avoid paying for help with federal student loans
Those who want ore need to find an alternative way to pay off their federal student loans might be left wondering how they should do so if so many of the options out there don’t really benefit the consumer. Get this: There’s a way to lower your interest payments, change your repayment terms, reduce your monthly payments, and add or remove co-signers, all without fees. This can all be accomplished through a student loan refinance.
You might be wondering if this is a trustworthy route after reading so much about not trusting something that sounds too good to be true. While there are some downsides to refinancing certain federal loans, this is a legitimate process that has the potential to help many borrowers.
So, what is refinancing? This is the first thing you need to understand in order to gauge whether it’s the right decision for you. Refinancing is a process that happens across almost every form of debt in one way or another. It’s simply taking out a new loan to totally replace preexisting debt. The rates and term of the new loan will then determine your repayment schedule.
This can be a hugely advantageous tool for those with higher interest loans—such as federal Direct PLUS loans or private student loans. The downside to refinancing is that it can only be done through a private lender. While there’s nothing inherently wrong with private lenders, borrowers who refinance will lose certain federal loan benefits. This includes the ability to qualify for income-based repayment plans or loan forbearance. Those with federal loans have been happy to have their payments paused during the COVID-19 pandemic, which would not be available with most private loans.
At the same time, individuals who are confident in their ability to repay their loans, especially with reduced rates, and don’t think they’ll utilize federal programs in the future, might benefit a lot from securing a low interest rate. It’s up to every individual to determine what makes most sense for his or her situation.
No matter who you are, though, it never makes sense to pay needless fees. You don’t have to pay for help with your federal student loans. Don’t let anyone convince you otherwise.
Story by Johnny Depp Jr.
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