SPOKANE, Wash. — There's a sense of pride when a student walks across the stage at graduation. For some, that feeling can change as they walk off with not just their diploma, but mounds of debt.
For millions of college students, student loans are a huge financial burden and, scammers are using that fact to take advantage of students and graduates. The Better Business Bureau said they're seeing a spike in student loan debt consolidation scams.
Unfortunately, when issues like this make headlines or are top of mind for consumers, scammers try to take advantage of your wallet.
"A lot of students are getting out of college right now and are looking to have the lowest payments they can or they want to be able to pay off their debt as fast as possible," said Tyler Russell, with the BBB.
The latest numbers show borrowers from the class of 2017 owe on average about $29,000 in student debt and that number is climbing.
Scammers know they can leverage this to trick people into giving them money. Russell says the BBB is seeing more college loan consolidation scams pop up. So far about 50 victims across the country have reported college debt consolidation scams to the Better Business Bureau, which means the number is likely much higher.
"Whether it's via phone, email, or text message even letters to be able to provide relief for a nominal fee," he explained.
They claim they have helped other student loan holders and can give you a lower interest rate while lowering your payments. It may sound good but you have to pay them a fee up front, which is a huge red flag.
"Those scammers like using high pressure tactics to say hey you're not going to be able to get the things you want to have in your life so if you don't pay this down, they create that sense of urgency, so people will act quickly and without doing research," Russell said.
Instead of helping alleviate your debt, they take your fee and disappear. It's why Russell says you should never pay a fee and advise families to do their research and ask a lot of questions.
"Know your options, if you're having trouble paying back your student loans, know what options are out there. If there's a loan alleviation program within your university or with your lender, make sure you find out that information," he said.
According to the College Access and Success, 52% of Washingtonians have college debt and in Idaho that number is even higher, 61% owe money from college.
Better Business Bureau advises student loan holders to look out for red flags and follow these tips to avoid getting scammed:
- Never pay upfront fees. Avoid deceptive phrases like, "We do the work for a fee." Real lenders will take a percentage once their service is complete and will never demand a fee upfront.
- Never give a third party power of attorney. Don't sign anything giving a company the power to negotiate on your behalf. A fake company can use this to take control over your loans.
- Do your research and ask questions. Check to see how long the company or lender has been in business and ask questions. Does the lender appear to be well-established? Are they pushing you to make a fast decision? Remember, don't give out any personal information, including your Social Security number, to unfamiliar parties.
- Know your options. If you are having trouble paying back your student loans, contact your lender directly to discuss ways to make it easier to repay your debt. Options may include making lower payments or suspending loan repayments for a while. The type of student loan you have and the type of lender (government or private) will impact the kinds of options available to you.
- Don't ignore payment notices. Don't wait to deal with the issue and never ignore legal notices about past due loans. Be aware that loan delays or other changes to loan terms will probably result in higher total loan cost over a longer period of time.
- Keep your student loan debt under control. The Institute for College Access & Success works to increase public understanding of student debt.