Predatory Student Loan Relief Organizations: How They Work And How You Can Avoid Them

Student loan debt is not just financially draining. It can also be emotionally damaging. The tens of thousands of dollars of debt can feel like an anchor hanging around your neck, weighing you down and preventing you from achieving prosperity. You were told to go to college and study hard, so you did. You were told there would be jobs waiting on the other side. There were not. Now what?

There’s usually a 6-month grace period after graduation before you have to start repaying your student loan(s). That started the minute you received your diploma. If, like most of the class of 2014, you don’t have a job lined up immediately, that ticking clock can be pretty panic-inducing.

This is the kind of emotionally vulnerable situation scammers love to exploit. They take advantage of the fact that you’re desperate to get out. Your “too good to be true” alarm doesn’t go off like it should.

You see an advertisement online, at the bus stop, on the radio or on a light post in your neighborhood. The ad tells you there are new student loan forgiveness programs that can free you from your debt. You might not have to pay any of it, thanks to official-sounding programs like the “Obama Forgiveness Program.”

Eagerly, you call the number or visit the office. You tell them your situation and they explain that there are a variety of programs to help people just like you. All you need to do is pay them an up-front fee, which can be as much as $1,200. Compared to the size of your debt, that’s an insignificant cost.

The catch? These agencies, like First American Tax Defense and Broadsword Student Advantage, either don’t offer any services at all or provide information on services that are readily available for free. They’ll send you forms that you could have found at no cost and pocket the difference.

These particular companies have been the target of a lawsuit from the Illinois Attorney General’s office. The Attorney General alleges that these scammers have broken an Illinois law prohibiting the collection of money upfront for debt relief services. That’s a start, but these organizations are likely just the tip of the iceberg. As long as people are desperate and afraid, organizations will be trying to defraud them.

If you have student loan debt, be on guard against these schemes. Getting rid of your loan debt is the obvious solution, but it may not be practical right now. Here are four concrete actions you can take to protect yourself today:

1.) Educate yourself about government loan relief programs. The Department of Education’s website, studentaid.ed.gov is a great place to start looking. Three very popular options are public service loan forgiveness, teacher loan forgiveness, and Perkins Loan cancellation. If you qualify for these programs, you can have your debt forgiven, sometimes altogether.

2.) Speak personally to your lender. Under most of these programs, you don’t need to fill out a standardized form. Each lender has their own paperwork that they’ll provide. They don’t lose money on the forgiveness process; they get the loan paid in full immediately. Even if you don’t qualify for forgiveness, you may be eligible for income-based repayment or some other system to lower your monthly payments. You can ask these questions directly – you don’t need an intermediary.

3.) Make repaying your student loans a priority. As soon as you land a job, set a monthly budget that includes both savings and an aggressive debt repayment plan. Getting out of debt and moving toward financial security will give you the confidence to resist these scams in the future.

4.) Get re-consolidation help from a lender you already trust. If you’re juggling student loan debt, a car payment, and credit card bills, you might be able to save a bundle by getting a debt consolidation loan from NASA FCU. This loan takes all your outstanding debt and re-bundles it into one easy monthly payment. This consolidation can make it easier to make your monthly payments and give you the breathing room to gain financial peace of mind. Speak to a representative about your debt repayment options today!