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