Dozens of companies charge high fees and claim to help borrowers get student loan forgiveness or debt relief. But if you’re dealing with anyone other than the federal government or a non-profit organization, it’s a scam.
It doesn’t mean you’re stuck. You can end all contact with these companies and apply for federal student loan programs that could reduce your debt or possibly lead to remission through the US Department of Education websites. And these programs are free.
Here’s what to do if you’re involved with a deceptive student loan assistance company:
1. Cut your connection to the company
Call the company to request a refund and terminate your contract, if you have signed one. If you have automatic payments set up, let your bank or credit card issuer know that you no longer allow fees from the “debt relief” company.
Company may not respond or cooperate with your cancellation request. You can stop making payments anyway, says Persis Yu, director of the Student Loan Borrower Relief Project at the National Consumer Law Center.
“Since these companies exist on the fringes of legitimacy,” Yu says, “I think borrowers should feel okay to stop making payments.”
However, there is an “outside possibility” that the company could sue you for breach of contract or send your invoice for collection, she adds.
Once you’ve cut off all contact with the company, monitor your personal and financial information for a while, says Suzanne Martindale, an attorney at Consumers Union. Make sure that you are no longer charged and that negative marks do not appear on your credit report.
2. Alert your lender or repairer
If you don’t know who your repairer is, log on to Federal Student Aid website to verify. Your loans are probably private if you don’t see them listed on the government website, but they will show up on your credit report. If you have more than one loan, you may have accounts with multiple service companies.
If the agent at the loan service company you speak with isn’t helpful, ask to speak to their manager, says Robyn Smith, an attorney who works with Yu at NCLC and also at the Legal Aid Foundation in Los Angeles. .
“Go as high as you can,” Smith says.
3. Take back control of your student loan account
If you gave the “debt relief” company access to your student loan account through a power of attorney form, revoke that agreement. To do this, contact your lender or repairer in writing and attach the original agreement if you have it. Send a copy of the letter to the debt relief company.
Smith suggests saying something in the letter to the repairer like: “I notify you that I revoke the consent attached. Effective immediately, please cease all communication regarding my account with [the debt relief company’s name].”
You may need to get the statement notarized if your repairman requires it, adds Yu. Even if it doesn’t, notarizing the statement will help it carry more weight. Make copies of the statement and keep them for your records.
Once you have regained control of your student loan account, resume making loan payments to your federal loan officer or lender if you have stopped.
4. Use existing federal loan assistance
Despite what it might claim, there’s nothing a student “debt relief” company can do that you can’t do for free through the Department of Education or your agent. federal loan. Including:
Income Oriented Repayment Planswhich caps your monthly payment at a percentage of your income and cancels your remaining balance after 20 or 25 years.
Federal Loan Forgiveness Programs, which can cancel some or all of the student debt of eligible borrowers depending on their employer, occupation, or type of loan. However, the remission is not immediate, as some student debt “relief” outfits may imply.
Postponement and patiencewhich offer temporary periods of payment relief, but increase your balance as interest continues to accrue.
Also you can refinance your student loans through a private company if you have good credit and enough income to comfortably pay. However, by doing so, you will forfeit access to the federal loan programs listed above.
5. Seek legitimate professional help
If you’re looking for a professional to discuss your student loan situation with, a certified student loan counselor trained by the National Foundation for Credit Counseling is a safe option. These counselors work for non-profit credit counseling agencies and provide individual services for free or at nominal costs. You can find an advisor on the NFCC Student Loan Assistance Website.
For more complicated issues, such as default navigation or collector management, it may be a good idea to contact a student loan lawyer. Some not-for-profit legal aid organizations have expertise in student loan matters and can help you for free or at a reduced rate. To research for your local organization and ask if it or another organization can help you.
6. File a complaint
It may feel like shouting into the air, but filing a complaint is a crucial step. Government officials base their investigations of fraudulent companies on consumer complaints. Depositing one also increases the chances of getting your money back.
Finally, consider reaching out to members of Congress to tell your story. Staff members in charge of constituent services may be able to assist.