Fake Settlement Offers: Avoid Getting Scammed

Get Info on the Fake Settlement Scam that is bothering Student Loan Borrowers. Learn how to spot a scam and how you can avoid getting scammed.

Updated by Vidish S on 14th February 2020

Something every Student Loan Borrower needs to be aware of right now is the scam settlement offers being sent out by malicious parties that offer to settle student loan debt for a small fraction of the real credit balance. The truth of the matter is that in the real world, settlement offers are very rarely offered to severely delinquent borrowers. Usually, borrowers get scammed because they aren’t well informed about the same and they desperately want the offer they receive to be true. These Fake Settlement Scams are no different.

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What Gives Away This Scam?

Although there does exist something known as Student Loan Debt Settlement, it is very rare and only provided to defaulted or severely delinquent loanees. Even then, the lender will likely not reach out to you over an email regarding the same, rather it is done personally by an employee of the collections department of your lender, over the phone. If the lenders do wish to contact you over the mail, it will most probably be through a corporate Gmail account that ends with the domain of the lender, such as @sofi.com or @salliemae.com and not through a personal Gmail, Hotmail or Ymail account. The best way to ensure you are not being scammed is to go on to the lender’s website and use the contact info provided there to contact them and ensure that the mail wasn’t sent by them. Refrain from clicking any links given in the email, you never know what it might lead you to.

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How to Handle such a “Settlement Offer” if you do receive one?

If someone contacts you and claims to be a representative from your lender, refrain from giving them any info and instead ask them the reason for giving you a call and ask for some verification before you continue conversing with them and give them your account info.

If they say that they are calling to discuss your private student loans, then go to the lender’s website and give them a call, explaining what has just happened and find out what is going on. If the call is regarding Federal Student Loans, then go to the federal government loan database to check out the info regarding the loan in question. You will get the required contact info on the website and should give them a call and enquire about the offer you have received. 

Are these Frauds quite common? 

As the number of students going into default and the number of account going delinquent increases, scams such as this one will probably keep increasing as well. As the number of people getting desperate to pay off their student loan debt increases, the number of scams such as this will continue to rise. So yes, these scams do appear to be popping up quite often among those in student loan debt.

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Final Thoughts

We all have heard of student loan scams before. Scammers will always try to pull a fast one over a borrower who is naive enough to fall for it. To put it plainly, common sense is the best defense against such scams. If something ever seems too good to be true, then it most probably is. As a student loan borrower, every penny is precious and if you ever find yourself in a situation that seems fishy, the best course of action is to take a step back and give it some thought. Don’t let your financial situation push you into a scam.