We have all been hearing some very bad news about student debt. It is still growing and we hear about the plight of college graduates being in so much debt before they even have the means to repay what they owe. This is a problem that the federal government had been trying to solve. This is also the same problem that fuels the growing student loan debt relief industry.
In a recent article from CNBC.com, the article stresses how this emerging industry is drawing scrutiny from consumers and government alike. The article discusses how the 7 million Americans struggling with student debt attracted the debt relief industry. They come with promises to reduce the debt of individuals so they can make better progress with their debts despite a limited income.
Can the debt relief industry help those with student loans?
But what exactly is the student loan debt relief industry doing for consumers?
The CNBC article quoted a student loan counselor from a nonprofit counseling agency who commented that these companies target the emotions of debtors. They advertise that they can help demolish student loan debt and promise all sorts of instant relief. This should make consumers wary because of various points:
If you know the Telemarketing Sales Rule or the TSR, you should know that debt relief companies are prohibited from making false promises. So unless the company can do some magic or can seriously sway all creditors, they should not be advertising this.
They make promises to give you aid that comes from the federal government anyway. You don’t need to go through these private companies to get aid from the government.
You will be paying unnecessary service fees because of these private companies. If you go straight to the federal government aid, you eliminate these fees and instead, add it to your student loan payments.
According to the research and investigations conducted by the National Consumer Law Center or the NCLC, a lot of the student loan debt relief companies provide inaccurate information. They mislead consumers about their options to make debt ridden individual prefer them over other debt solutions. Not only that, they almost never disclose the prices and fees involved in the whole process. This in itself, is another deception.
Although there are legitimate companies operating in the student loan debt relief industry, you need to be very careful when you choose the company that will help you out. Make sure you read the laws protecting you and the different options that you have to solve your debts. There are various programs that can incorporate your student loans and you have to do your research. If a company comes to you to tell you that there is a single formula to get rid of your debts, do not believe them. If they try to convince of availing their service to get out of debt without analyzing your debt and financial condition, that should raise your suspicions. This is a strong indication that they are more concerned about the profit to be gained from your debt than a sincere intention to help you solve your problem.
Important tips when getting debt help for your student debt
When you are trying to find student loan debt relief, there are a couple things that you need to remember. We personally cannot do anything about the scammers in the industry except to be vigilant and try to have adequate knowledge of your options. Although the government is trying to flush the illegitimate companies out, we need to protect our own backs. Here are some tips to help you be successful in breaking free from your student debt.
Do your research. There are many things that you need to learn about the debt relief industry. Take time to browse the Internet to know your options for student loan debt relief. You can begin your search through the StudentAid.ed.gov site.
Know the law. Aside from knowing your options, you should also understand the laws protecting you from scammers and abusive individuals trying to scam you out of your money.
Coordinate with the federal government directly. There is not much sense paying for student loan aid when you can get it for free – you just have to exert more effort in doing the legwork yourself. Even with professional help, you still need to monitor your debts anyway to make sure your payments are being sent.
Grow your debt payment fund. Regardless of the debt relief option that you have chosen, you still need to make your debt payments. Growing this fund will help you pay down your debt a lot faster. This can be done by either earning more or cutting back on your spending.
In the end, practicing proper money management will help you deal with your student debt. Not only that, knowledge will serve as your best defense against abusive debt relief companies. It will also help you understand how your debts should be dealt with to provide a more long lasting relief. Here is a video that you can watch about the 5 steps towards debt freedom.