I found the picture above by searching “student loan advisor” on craigslist job boards. The firm that listed the post was hiring “CLOSERS ONLY.” There are so many dishonest businesses out there in this industry, I’m going to teach you how to spot a student loan scam. Unfortunately, the scum of the earth have moved out of the no income no job no assets mortgage business into the student loan consolidation business. If you’ve ever seen “Obama Student Loan Forgiveness” or “Secret Government Student Loan Program,” you’ve witnessed these scammers in action. Here’s how to watch out for them, and how to know that I’m not one of them.
To Spot a Student Loan Scam, Look For High Pressure Sales Tactics
This ad on craigslist has some of the scariest language I’ve ever seen for folks who should be helping others. Listen to the job description they listed:
Looking determined PROS looking to make a minimum of 2k a week with the capability to make 4k a week if your skill set and work ethic is on point, REAL CLOSERS who have been waiting for an opportunity to make 6 FIGURES a year while doing this cake walk student loan sale.
The “cake walk student loan sale” they’re talking about is consolidation. Basically what consolidation does is that it lumps all your loans into one loan with the same weighted interest rate. That loan is now a direct loan from the federal government, and is eligible for more repayment options in some cases and also qualifies for the PSLF program.
Any business that focuses on pitching prospective workers on the earning potential without mentioning the opportunity to help and create value for customers is a shameful enterprise. Some people frankly just do not care about ethics when it comes to business. If you discover your student loan company using words like this with their employees, RUN.
Ask If All They Do is Consolidate Loans, Because Consolidation is Not the Answer for Everyone
Consolidating student loans is a case by case decision. Sometimes the interest on loans has accrued to an enormous level. To consolidate would mean that the interest would capitalize, then the borrower would be paying interest on interest.
Furthermore, consolidation also resets the clock for loan forgiveness programs. If someone had $250,000 of debt on a $50,000 income, they likely have no chance of paying it back in the private sector. Such a person would go on one of the income based repayment plans and make a strategy for paying the tax payment at the end of the period. If that person consolidated, they could lose years of credit towards forgiveness.
Ask Them About their Student Loan Knowledge
Anybody working in the student loan space should be able to describe the basic characteristics of the major repayment plans cold. They should know when to see if you’d be eligible for PAYE, if you’d get an interest subsidy with REPAYE, and how long payments will last until loan forgiveness.
This operation on Craigslist is clearly not looking for people who have any knowledge of student loan repayment strategies. They want people who are nice and greedy who will not ask too many questions. If you accidentally called them and spoke with a rep, you could avoid a lot of trouble simply by checking their knowledge of student loans. When they are revealed to have none, hang up the phone.
Student Loan Scams Charge Massive Fees
If a company charges close to $1,000 or more to help with your student loans, it’s probably a scam. To have that high of a fee be legitimate, the company should agree to provide you year long support. It should model your loans with a spreadsheet and give you a breakdown of costs. The company should handle all the refinancing applications for you, and give the best advice in the world.
Instead, the most evil firms doing the least for clients charge the most. These scams ask for around $1,000 to fill out a simple form that people could do for free if they called their loan servicer.
What’s the Difference Between What They Do and What I Do?
My business is based on the idea that everyone should have access to a professional, sophisticated, math based analysis of their student loan debt. I want to treat it like a CPA would treat your taxes. My goal with Student Loan Planner is to be known for providing the best objective student loan advice in the country.
I work really hard reading everything I can about student loans, programming excel spreadsheets, writing content, and observing a huge variety of different loan problems in my business. I spend my time finding the right solution for each client, not “closing a one call sale.”
Even though most of the private refinancing companies pay me a couple hundred dollars or so for funded loans, less than half of my clients receive that advice. The client and their personalized plan comes first. Government repayment plan optimization is frequently the right approach, but sometimes private refinancing is better.
If you have a huge loan balance and a low income, I’m going to recommend a government program. If your loan balance is reasonable and you work in the private sector, then of course I’m going to suggest a refinancing partner.
Because of my negotiated agreements with lenders, we will both earn bonuses and clients will receive a massively lower interest rate.
Knock on wood, check out the reviews I have so far on my Facebook page. I go out of the way to provide conscientious and professional help for people with large student loan balances. Life is too short and heaven too long to earn money the way the scumbag scammers do in the student loan industry.
I Got Reader Hate Mail, and I Don’t Blame Him
After my post on veterinarian student debt got over 23,000 views over three days, I received a flood of emails. Most were very positive. Only one thought I was a scammer.
Here’s a summary of what the reader thought my business was about:
I hope no one pays your scam of a fee for something that you can do completely on you own. Find a different job and stop preying on people. You should be reported to the BBB.
I actually loved receiving this email. I ended up working with him and found him a lower rate in the private refinancing market. Instead of paying interest rates over 6%, I found him an interest rate below 2.5% variable and 3.5% fixed. If this gentleman takes my suggestion, he’ll end up saving thousands of dollars over the next couple years.
I can’t blame the reader who thought I was one of the “CLOSERS.” The vast majority of student loan firms today are based on this dishonest business model. The money is quick, the rules change all the time, and the window is short to make a buck and go home before Congress clamps down.
The reason I’m different is that I know the rules. I know how to build spreadsheets, and I use them in my consultations. I fight for people with bad credit to see if I can locate them an offer to get their 9.75% variable rate loan down below a 6%. Sometimes I even conference call the loan servicer and make sure my client gets the right information.
Scammers Will Need Many More Closers Soon
Now that you know how to spot a student loan scam, get ready to see a whole lot more of them. The new government repayment options are even more complex. Between old IBR, new IBR, PAYE, ICR, REPAYE, Standard 10 year, Extended, and private refinancing options, I expect more scam companies will try to sell consolidation as a one size fits all solution. These companies will continue to charge upwards of $1,000 until Congress passes legislation to shut them down.
In the meantime, I hope to continue providing low cost flat-fee consultations on student loans. So far, I’ve been overwhelmed by the response.
I Can Help Navigate Student Loan Repayment So You Won’t Fall Victim to Scammers Out There
Student Loan Planner, LLC provides low cost, flat fee student loan advice. I only charge a one time fee. For each consult, I perform a holistic loan analysis to see what your best available repayment options are.
If your debt to income ratio is below 1.5, I might be able to get you up to a $300 bonus with lower interest costs through private refinancing partners.