Desperate people are the perfect targets for scams, and with so many people drowning in student loans, it's no wonder many fall for hoaxes like the obama student loan forgiveness scam. How to spot a scam and how to find real, legitimate help?
We're talking about numbers so large that some college graduates have little hope of paying back these loans within the next couple of decades. Thinking you have decade-long payments of hundreds or even well over $1, 000 every month is scary, and you'll be looking for anything (or anyone) who can help.
"Have you heard about the president's new student loan forgiveness? "This is a tantalizing come-on that prompts people to call for more information. When you call, hear how the company can help you. Someone will likely ask you for an upfront payment to either do the paperwork on your behalf or negotiate with your lenders, or they will say they will refinance your loans. Let's be clear. Whether president obama is mentioned or not, these are likely scams.
Understand first that only in the rarest of cases can student loans be forgiven. Even if you file for bankruptcy, your loans won't go away. If you qualify, the process will take a long time and many legal fees, but you should not plan to qualify. Most people don't.
The paperwork these scammers fill out for you is available for free. You don't need an attorney or someone with training and expertise you don't have. If you are having trouble paying your loans, call your lender and explain that you are looking for different repayment options. It will explain what help you might qualify for without charging you anything.
If you have multiple student loans, consolidation is an option, but be careful how you do it. Scammers can consolidate your student debt into higher interest loans or make your public loans private. Private loans may not include debtor-friendly repayment options, forbearance and other perks that come with public loans. (for more information, see student loan debt: is consolidation the answer? )
How to avoid a scam
Scammers will try to take advantage of your sense of hopelessness by telling you too well -his true claims. Look past your emotions and first ask yourself if the company's claims are true. No, president obama didn't authorize anything that allows your loans to be wiped away now.
Second, if you believe the company is legitimate, don't pay anything up front. Companies that offer real credit services don't charge an upfront fee. You will take a percentage later.
Third, do not give third party power of attorney over anything of yours.Finally, don't forget that there is a lot of help available to you that won't cost you anything.
What help is out there?
President obama's part is not completely wrong. In 2014, obama signed legislation that expanded some valuable student loan repayment assistance programs. The "pay as you earn" program lets you cover payments of 10% to 15% of your discretionary income. If you make all your payments on time, the rest will be forgiven after 20 to 25 years. However, to qualify, you must demonstrate financial hardship.
There's also the similar "income-based repayment" option, which caps your payment at 15% of your discretionary income, with full forgiveness after 25 years.
If you are a teacher of certain subjects in low-income areas, you are eligible for 17 forgiveness dollars.500 US dollars, or if you are in a public career, your loans can be fully forgiven after ten years of employment. And consistent on-time payments.
There are also private scholarship programs for doctors and lawyers. In new york, the regents physician loan forgiveness award will give $10,000 to 80 or more people for making loans if they work in areas known for a shortage of physicians.
If you are willing to serve as a public defender or prosecutor for at least three years in an eligible state, the john R pays. Justice student loan repayment program up to 60.000 US dollars in student loans if you qualify. ..
There are many forgiveness programs. You can see some of the options at student loan hero.
You may also be interested in reading 10 tips for managing your student loan debt.
The bottom line
There's plenty of free help for you if you're struggling with student loans. You don't have to pay anyone to fill out paperwork for you. First, contact your lender and tell them you are looking for options to reduce your payment. Next, check to see if there are programs you qualify for (or could qualify for) that would lead to full or partial forgiveness if you would like to do so.
A word of warning: reducing payments does not reduce the interest that continues to accrue. Full forgiveness in 20 to 25 years sounds tempting, but if it increases the term of your loan, it may also increase the amount of interest you pay. The best approach, if you can manage it, is to try to pay off your student debt as early as possible. A promising trend: some employers now offer student debt assistance as a benefit (see new employer contribution: helping pay student loans ).