You Should Never Have To Pay Money To Get Money

Legitimate lenders and student loan companies will NEVER ask for money up front.  They will generally take a percentage when everything is complete so that you do not have to pay out of pocket or they will tack their fee on the amount owed so you pay it back when you are in repayment.  Either way, you actually get what you pay for, which cannot be said for the scams described below.

Decorative Image of Admiral Ackbar from Star Wars Saying

If It's Too Good To Be True...It Probably Is

Student Loan Scams

Third Party Corporations

These corporations repeatedly contact borrowers about "services" they can offer on behalf of the borrower.  They require maintenance fees in addition to the loan payment in order to "consolidate" your loans, "manage repayment", etc..  Some cases we have seen even had borrowers erroneously sign over Power of Attorney to the company in order to "maintain" their Student Loans.

You do not have to pay anyone to do a consolidation, repayment plan change or loan rehabilitation for you!  There are no additional fees for any of these procedures.  You have worked hard for the money you have and any money spent on your student loans should go to your student loans.  You do not need any other company to work for you in order to successfully pay off your student loans; always work directly with your servicer to see what options you have available.  

Loan Consolidation Scams

Recent graduates are being hit with student loan consolidation scams promising to consolidate their loans for a fee (processing fee, administrative fee, consolidation fee).  Some scams will tell you it lowers your minimum monthly payment.  These companies will take your money and either do nothing, or they will move your Federal student loans into a private loan (loosing all the benefits that come with Federal loans).

Loan consolidation is when several loans are lumped into one loan so the graduate has one payment to make instead of many.  This can be a wonderful option for some graduates!  However, you should never pay money to have your student loans consolidated.  And consolidation just puts all of your loans into one place, it won't lower your balance.

This is the site you should use to consolidate your student loans, if you choose to do so.  It is FREE and takes only 30 minutes.  

Refinancing Fee Scams

This scam involves a company approaching you and saying that they will negotiate, on your behalf, with your servicer in order to get you a better interest rate on your student loans.  They will show you cases where other clients have saved thousands of dollars by working with them.  They will as for a fee in exchange for these services.

This is a scam not only because real lenders will not charge fees up front (they will instead take a fee when they close the loan, typically from the loan amount), but because you cannot refinance your Federal student loans.  Currently there is no way to change the interest rate on your student loans (other than loan consolidation, see above) and the only way that could change is if Congress passed a law allowing graduates to refinance their loans.  

Loan Elimination Scams

These scams involve a company contacting you saying that, for a fee, they can negotiate the settlement of your student loans (that is, paying a lump sum of money that is less than the amount you owe, usually pennies on the dollar).  They will take your money and nothing will change with your loans...because settlement is not an option with student loans!

Your Federal student loans are a contract between you and the Federal government.  There are only three ways to get rid of your student loans: the borrower pays them off (or some combination of payment with loan forgiveness), the borrower becomes totally and permanently disabled, or the borrower pass away.  You cannot negotiate the terms of the loan because they are set in Federal statute (that is, Federal law).  Go to the "Paying Off Student Loans" tab on the Financial Education Program's "Student Loans" page for legitimate repayment options.


FAFSA stands for Free Application for Federal Student Aid.  It has the word "Free" in the title, so you should NEVER pay money to file your FAFSA!  There are several sites that promise to help you fill out your FAFSA...after you pay almost $80 in fees.  While these companies will walk you through the FAFSA, there is no reason for you to pay for something that can be done on your own.  Also, the FAFSA has recently been shortened so it it quicker to fill out.  

This is the FAFSA site you should use and it's the one that's free!!

Instead of paying that money towards an application that's free to fill out, use that $80 on rent, tuition, books and other items that are related to your education!