For those who have just completed their education, the thought of paying back student loans can be daunting. According to U.S. News and World Report, the average bachelor’s degree holder takes 21 years to pay off his or her loans. Often individuals turn to debt relief companies that specialize in student loans to alleviate their concerns and lower their repayment burden. All may not be what it seems with some of these companies, however, here are some tips that can help you spot a potential problem before you select a company.
The Consumer Financial Protection Bureau offers these tips to consider before you decide to use one these companies:
- Save your money. There is really no need to pay any company for help with your loan. Most reputable companies offer free help. In addition, the U.S. Department of Education provides free assistance to help lower or cap your monthly payment, see if you qualify for loan forgiveness, consolidate your federal loans or offer advice on how to get out of default. Avoid working with companies that require you to pay them before they actually do anything to help you. If you’re unsure, contact your student loan servicer to get the facts.
- There are no guarantees. Avoid signing up with any company that guarantees loan forgiveness or debt cancellation because this just doesn’t happen often when it comes to student loans. Many programs are income driven plans that are established by Federal law and, in some cases, require years of payments for any type of loan forgiveness to occur. In addition, refinancing a student loan from a federal to a private loan means you’ll be giving up certain benefits the government offers, like deferment or discharge benefits for death or disability. Crunch the numbers before you act.
- Stay in control of your decisions. You shouldn’t need to sign a third-party authorization form or Power of Attorney (POA) with any debt relief company. These are written documents giving them legal authority to make decisions on your behalf.
- Be security conscious. Do not give any company your Federal Student Aid PIN. It is not necessary and should not be given to anyone. Remember, that number is same as you signing any documents related to your student loan so be just as cautious with that PIN as you would any other financial PIN (e.g., online banking, ATM card, etc.).
If you feel you’ve been a victim of a student loan debt relief company scam, please call the CFPB at (855) 411-2372, as well as your lender as soon as possible. Additionally, talk to your student loan servicer for assistance with any questions or concerns you may have with your student loan.