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If you are looking to refinance student loans, there are trusted companies like SoFi that have earned a great reputation for helping people save money.

However, there are also other companies that engage in student loan forgiveness scams and other deceitful ways that hurt borrowers. These scams occur more often than people realize. That is why Nerd Wallet found that some people are spending an average of $613 on debt relief services.

How do you know if you are dealing with a scam or a reputable company? Here are four things to watch for.

1. Pay Up Front Scams

There are some companies that pressure you to pay an up front fee in order to get a better interest rate with your loan. According to the College Investor, this fee can cost up to 5 percent of the loan or it is a flat fee of up to $1,000. Any company that forces you to pay up front in order to receive a discount later is trying to scam you. If you encounter such an offer, you should avoid it and leave.

2. Fee Scams

Paying up front isn’t the only scam that some fraudulent companies have for payers. According to the College Investor, there are additional fees that you would be forced to pay from some companies for student loan consolidation. Examples of this include application fees or administrative fees.

3. Student Loan Forgiveness Scams

The Public Service Student Loan Forgiveness program allows students to eventually eliminate their loans if they work full time in public service. There are also other requirements, too. Some fraudulent companies claim that they offer automatic student loan forgiveness of loans if you sign up with their program. That is completely false. Even the PSLF program doesn’t do that. Watch out for these student loan forgiveness scams.

4. Credit Repair Scams

Recently, federal investigators cracked down on companies that received more than $11 million as part of a massive hoax. The companies promised to reduce or eliminate student debt with certain non-existent credit repair programs. Reportedly, the owner of one company used the funds from borrowers to pay for lavish personal things.

Solution: Use Trustworthy Student Loan Programs

Reputable companies, like SoFi, are the best option for borrowers. They offer low fixed rates and no application fees. Apply with SoFi today and you will could save money.



