March 29, 2016
As if those with piles of student debt didn’t have enough to worry about, now they have to keep an eye out for scam artists. The Kentucky Association of Career Colleges and Schools (KACCS) and Better Business Bureau of Minnesota and North Dakota (BBB) recently issued a scam alert to those who are active on social media who also have student loan debt to let them know they may be targets for a new scam.
College Graduates Ripe for the Picking
It turns out that the student loan audience is vast and ripe for the picking when it comes to scams. In recent years, the number of graduates with student loan debt in America has reached 69 percent, the highest level in history. The average debt per graduate was $27,022 at the end of 2014, and based on a consistent increase in the average amount of debt per graduate over the last 11 years, it’s projected to grow significantly in the future. That means these scammers are currently targeting two-thirds of the population who will be making payments annually for the next 10-30 years.
Reaching Out Through Social Media
Another important aspect that has college graduates in danger is their attachment to social media. The millennial generation, or those 18-35, grew up with social media, making them the most interconnected group of graduates to date. It’s easy for scammers to use social media, not only to see who’s dealing with college debt, but also to find their personal information, including phone numbers and home addresses.
The con artists behind these schemes are primarily reaching out to people on Facebook, though the scam is becoming more prevalent on other social media pages like Instagram, LinkedIn, and Twitter. Facebook, in particular, makes it easy to find information about anyone, including the graduation information that’s listed on their profiles.
Then, they offer the pitch though a Facebook message, e-mail, text, or phone call: a quick and easy way to get out of mountains of student loan debt. They claim the services to be entirely free and part of a brand new government program or policy. They post or read off a link from a sponsored Facebook page or website that takes you to a misleading landing page. Once you’re on the false company’s website, they’ll charge a fee upfront to pay for negotiations with the lender. They might also ask you to pay a fee to consolidate your funds, but such a service is illegal, since it’s free to consolidate your loan through the government.
In several cases, the upfront fee has been around $600, but there was no delivery of services on the part of the company. In any situation, the scammers will take your money without rendering any service, and you’ll be out even more money in the pursuit of paying off your student loans.
Recommendations for Spotting These Scams
The KACCS and BBB have both issued warnings to student loan holders regarding these scammers and have a few ideas for avoiding them. Their recommendations include the following:
- As a general rule of thumb, if it seems too good to be true, assume that it is. There are no government programs in place to erase student loans, and there likely never will be. Simply ignore the advertisement, e-mail, or phone call.
- Anytime a suspicious program asks for an up-front fee before services are rendered, don’t pay it. You don’t know for sure that they’ll follow through, and it’s not worth the risk.
- Don’t sign over power of attorney to a third-party unless you understand the document completely. If you give another company power to negotiate loans on your behalf, you’re giving them all the power, which can lead to even more financial issues.
- Do some research on these offers. If it seems a little far-fetched, see if anyone else has experiences with a program before joining.
- Report incidents such as this to the Federal Student Aid Office of the U.S. Department of Education. They can give you more reliable information and take action to catch the guilty parties.
- Spread the word about such scams to your friends and family. You could save yourself and your family hundreds by simply being on guard.