Student Loan Debt Relief
Are you struggling to pay off your student loans? Debt relief companies will say they can help reduce your monthly payment or get your loans forgiven. But after you pay, you might be worse off. You don’t get the promised help — or your money back. If you stopped paying your loans, your credit could be damaged, too, and your loan balances could balloon. You don’t have to pay for help with your student loans. A company can’t do anything you can’t do for yourself.
Student loans are debt you have to pay back, even if you don’t finish your degree. But depending on your situation and what kind of loans you have, you might be eligible for a different repayment plan or to get your loans forgiven. And when it comes to qualifying for these programs, there’s nothing a private company can do for you that you can’t do yourself.
If you have federal loans (government loans), the Department of Education has different free programs that could help, including:
- income-driven repayment plans — your monthly payment is based on how much money you make
- deferment and forbearance — you get to postpone making payments, though interest might cause what you owe to increase
- loan consolidation — you combine all your federal student loans into one federal student loan and make one monthly payment. It might give you lower monthly payments over a longer repayment term. But then you could pay more in interest in the long run.
- loan forgiveness or loan discharge — in some very limited circumstances, you don’t have to pay back some or all of your loans. You might qualify if you have certain jobs, a disability, or if your school closed or committed fraud. Also, under certain income-driven repayment plans, any balance that remains after 20 or 25 years of payments is forgiven. In some cases, you may owe income taxes on the forgiven or discharged amount.
Applying for these programs is free. You can find out more about your options at the Department of Education’s StudentAid.gov or by contacting your federal student loan servicer. You also can find out more about how to get out of default.
With private student loans, you typically have fewer options, especially when it comes to loan forgiveness or cancellation. To explore your options, contact your loan servicer directly. If you don’t know who your private student loan servicer is, look at a recent billing statement.
Consolidating your student loans means combining multiple loans into one loan. Typically, people consolidate their loans to simplify monthly payments or get new repayment terms.
Loan consolidation isn’t a good idea for everyone. Whether consolidating helps you depends on factors like what type of loans you have, their interest rates, when you took them out, and whether they came with benefits you wouldn’t want to lose. When you consolidate your loans, you get a brand new loan with new terms.
Consolidating federal loans with the federal government is free. Private loans have to be consolidated with a private lender. There might be a cost, but avoid companies that tell you to pay up-front fees. Some debt relief companies and lenders offer to consolidate federal and private loans together into one new loan to lower your monthly payments or interest rate. Understand that, if they do, you’ll lose any benefits and protections offered by your federal loans.
Before you consolidate your loans, find out what it could mean for your specific situation. If you have private loans, talk to your loan servicer. For federal loans, call the Department of Education’s Loan Consolidation Information Call Center at 1-800-557-7392.
You shouldn’t have to pay an up-front fee.
You shouldn’t have to pay an up-front fee. If you pay up-front to reduce or get rid of your student loan debt, you might not get any help — or your money back.
No one can promise total loan forgiveness.
Before they know the details of your situation, scammers might say they can get rid of your loans through a loan forgiveness program — programs most people won’t qualify for — or that they will wipe out your loans by disputing them.
Only scammers will tell you to stop paying your student loans.
Sometimes scammers will tell you not to speak with your loan servicer — supposedly so the company can negotiate a better settlement for you. But not paying student loans can damage your credit, and your loan balances could balloon. And there’s no guarantee the company will be able to get a settlement, or that the settlement will save you much.
A Department of Education seal doesn’t mean it’s legit.
Scammers use official-looking names, seals and logos, and tell you they have special access to certain repayment plans, new federal loan consolidations, or loan forgiveness programs. If you have federal loans, go to the Department of Education directly at StudentAid.gov.
You have time to check out your options.
To get you to act fast, scammers tell you that you could miss qualifying for repayment plans, loan consolidations, or loan forgiveness programs if you don’t sign up right away. Don’t be rushed into a bad decision.
Some companies will tell you they can lower your monthly payments or interest rate by combining your federal and private student loans. But they might not mention that, if you do, you’ll lose any benefits and protections offered by your federal loans.
To report a student loan debt relief scam, file a complaint with:
· the FTC at ftc.gov/complaint
· the CFPB at consumerfinance.gov/complaint
If you have a dispute about a federal student loan, make every effort to resolve it yourself. But as a last resort, you can contact Department of Education’s Federal Student Aid (FSA) Ombudsman Group — but only if you have federal loans.