Quick Answer: Student loan forgiveness programs like Public Service Loan Forgiveness are legitimate for federal loans, requiring 10 years of qualifying government or nonprofit employment. Scammers exploit borrowers with misinformation and high fees, while private loan holders have no forgiveness options available.
For those looking for legitimate student loan forgiveness help it seems there are bad actors and scammers just waiting to take advantage.
Some of the most ridiculous scams I’ve seen seem to circle around misinformation and bad advice for ridiculously high fees.
Don’t get me wrong, it is entirely possible for have federal student loans forgiven.
Every weekday I read the enforcement actions, filings and fine print the outlets skip, and turn them into the one or two moves that actually improve your position — a rate worth moving for, a fee you can refuse, a deadline to beat before it costs you.
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I personally think the Public Service Loan Forgiveness program for federal loans is a great program. In this program, people who have covered employment can repay their student loans for less than the full payment and have the entire balance forgiven after ten years.
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This program is not available for private student loans. Private loan holders are out of luck.
The types of jobs that qualify for this program include any employment with a federal, state, or local government agency, entity, or organization or a not-for-profit organization that has been designated as tax-exempt by the Internal Revenue Service (IRS) under Section 501(c)(3). These jobs include emergency management, military service, public safety, or law enforcement services; public health services; public education or public library services; school library and other school-based services; public interest law services; early childhood education; public service for individuals with disabilities and the elderly.
Even Parent PLUS Loans can be sneakily eliminated with this approach. Click here for details.
But it seems the perfect scam is when most of the information is true and some isn’t. People assume it is all factual.
People have come to me after they were told their loans would be forgiven, even though they were only working just five more years and retiring before October 1, 2017, the first date loans would be eligible to be forgiven.
Student Loan Forgiveness Scam Examples
Under the Public Service Loan Forgiveness Program, only full on-time loan payments made after October 1, 2007, count towards the required 120 payments. Either the woman who told me the story would have to keep working years past her planned retirement age or she was scammed out of her $20,000 the company charged her for their worthless help.
I’ve even had people tell me they were sold a service to forgive their student loans when they didn’t work in any of the qualifying fields. There just isn’t any sort of loan forgiveness program that applies to all student loan holders.
Now those examples may be more bad advice than outright student loan forgiveness scams where you get mugged in a dark alley, but when you are paying good money to someone who is selling you a professional service and they can’t even get the basics right, that’s a scam in my book. Especially when you ask for a refund and they deny it.
Before you leap into a program that claims you can have your loans forgiven, do a bit of research and make sure you are even eligible for their help to begin with.
Ultimately the best way to avoid being scammed is to be a smart consumer.
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