If winning a lottery to pay off your student loan debt is one of your unrealistic fantasies, you need to know that it is quite possible since contests and promotions are designed especially for student loan borrowers. However, suspect any request that asks for detailed information related to your student loans or other secure information.
This should not be your only resort to repay your debt, but it can’t hurt to try your luck if the opportunity is legit. For example, Natural Light, a beer brand, sponsored a video contest in 2018 and advertised during the Super Bowl rewarded $40,000 each to 25 winners to pay their student loans off.
Student loan contests and promotions are just an internet search away. For instance, First Aid Beauty’s FAB AID contest gives graduates a chance to win up to $100,000 to pay their student loan debt.
According to Federal Reserve statistics, the debt of federal and private student loans accounted for more than $1.7 trillion in the fourth quarter of 2020. Now, this presents a hot opportunity for scam companies as they can take advantage of borrowers. Borrowers hence should ensure their private information is safe and secure; they should be skeptical of any entity that promises to help with student loan debt.
How to make the most of these atypical opportunities without ending up in more debt and trouble? Research! Contests are at times run by known companies and brands but beware of the ones that are hard to evaluate.
Watch out for the following when evaluating any such opportunities,
- Pay to play
- Prying secure information
- The one you never entered
Pay to play
If the contest asks for a fee, it is a bright red flag. Legally, legitimate contests and promotions that give away prizes have to be free, “no purchase necessary,” to be precise.
But it does not mean that the contest is entirely free; they do get something in return. It is often a means to collect information or gain followers on social media in exchange for the win. Take the First Aid Beauty contest, for instance; the entrants have to submit a video, follow the company on Instagram, and provide basic personal information.
It’s OK to participate in cases like these if you are familiar with the company and accept the contest terms.
But it is illegal to ask for any form of payment or purchase to enter a contest, so this is a telltale sign that it is a scam. If you notice any such sweepstakes, file a complaint with the Federal Trade Commission.
Prying secure information
Generally, it is your cue to be vigilant if you get a request for personal information about your student loans or other secure information like your FSA ID. There are various tactics deployed to get access to your student loan accounts; they involve the impersonation of federal agencies and student loan servicers. Look carefully at your mail and email for indicators that a message received is suspicious.
Federal Student Aid offers an array of options to aid you in managing student loan repayment, but it does not do that through contests or promotions.
Providing personal information to enter a contest or promotion is acceptable when the information asked for is general, such as an approximate total amount of student loan debt as part of a survey for entry into a contest.
The one you never entered
One of the age-old tricks to lure you in is telling you that you have already won the prize. For instance, they may ask for disbursement or redemption fees to claim your prize. One other way is the scammer may send a check but ask you to send a check back for the taxes or some additional fees. These scams are often convincing, and many people fall for them.
Scammers are one thing, but there are also legit contests that could help you big time. Understand the terms and conditions and any tax implications if you enter in any of them or any student loan-related promotion.