Law Office of Allan E. Dunaway, PLC

Debt relief companies taking advantage of student loan borrowers

The crushing burden of student loan debt that many graduates have to shoulder after completing school is familiar to thousands in Kentucky and across the U.S. With the still-stagnant economy, many new graduates are finding it difficult to find employment and cannot make their student loan payments. Many have problems meeting basic living expenses, let alone student loan payments. The New York Federal Reserve reported that about 6.7 million, or 17 percent, of student loan borrowers are in default on their loan payments, meaning that they are 90 days or more overdue in paying.

Those struggling with student loan debt may be tempted to use the services of one of the many student debt relief companies that have sprung up in the wake of the so-called "student loan crisis." However, a report from the National Consumer Law Center revealed that these debt relief companies are making money off borrowers' confusion about debt relief options available.

The NCLC investigated several student loan debt relief firms and discovered that the businesses charge already cash-strapped student loan borrowers up to $1,600 up front for a consolidation program that is not tailored to each person's unique financial circumstances. Some of the firms charge students $20 to $50 per month for "follow up" services.

Those who have defaulted on student loan payments can hardly afford to pay others so much money to help get them out of default, but these companies rely on borrowers' not knowing all of the free programs available from the federal government to help manage student loan debt. Some of the companies that the NCLC investigated portrayed federal government loan management programs as programs that their businesses ran and charged borrowers fees for enrolling in the programs.

People struggling with student loan debts have options for assistance in reorganizing their finances, but they need to go to credible sources for information. The federal government can provide information on programs it runs, and experienced debt relief attorneys can discuss other debt relief options with people.


Source: US News and World Report, "Student Debt Relief Companies Profit from Borrower Confusion, Report Says," Allie Bidwell, June 25, 2013

No Comments

Leave a comment
Comment Information
Contact the Firm

Get Sound Advice In A Free Consultation

For sound bankruptcy advice you can count on, from a skilled lawyer who truly cares about your future, contact the Louisville Law Office of Allan E. Dunaway, PLC. We have two convenient locations: Louisville, Kentucky, and Jeffersonville, Indiana. Our main office in Louisville is located off the beaten path so you won't have to deal with downtown traffic and can pull right up to our door and walk right in.

Call us at 502-785-1005, or send an email message. Our law firm welcomes the opportunity to serve you in any way we can.

If for some reason personal bankruptcy is not for you, if you do not qualify for the Chapter 7 approach via the "means test" and Chapter 13 reorganization is not the answer, Allan E. Dunaway works hard to inform you of other appropriate means of debt settlement that suits your unique needs.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Kentucky Office

Indiana Office

714 Lyndon Lane
Suite 4
Louisville, KY 40222

Phone: 502-785-1005
Fax: 502-412-2258
Louisville Law Office Map

530 East Court Avenue
Jeffersonville, IN 47130

Phone: 502-785-1005
Fax: 502-412-2258
Jeffersonville Law Office Map