I have two daughter who just graduated college. Between them, my husband and myself, we have 9 federal loans totaling almost 250K. At this time none of us can afford to pay the minimum loan monthly payments.
I recently contacted a college loan consolidation company. It’s a private company that charges for consolidating and reducing the monthly payments considerable. They charge per borrower because loans can only be consolidated by borrower not all into one lump sum.
I was told we are eligible for income based consolidation which would not only make our payment more affordable but would also be eligible for loan forgiveness after 25 years of payment if it takes that long. I realize that our financial situation would be reviewed annually.
My question is what do you think about these educational loan consolidation services? Is there something we should look for or be wary of when signing with them? Is there one company that you can recommend? Are there any services out there that do this not for profit? Are they as good as the companies that charge a fee?
I just want to make sure that I am making the right decision before spending more money.
I have attached a copy of the agreement of the company that I am working with now.
Thank you so much for reaching out to me for help. And a triple thanks for sending me the copy of the agreement from College Loan Services.
Let me review what that agreement says first to get a better idea of what they are selling you.
Keep in mind I am not a lawyer and my observations come from just reading the plain language of the agreement.
College Loan Services Agreement
When completed, page one gives up a lot of sensitive information that could be used for identity theft. Just make sure you are fully aware of who you are dealing with before providing such information.
Page two has more of the same concerns. But then there is the even bigger red flag that they ask for your pin code which the Department of Education advise that you NEVER give out to third parties.
Your PIN serves as your electronic signature and provides access to your personal records, so you should never give your PIN to anyone, including commercial services that offer to help you complete your FAFSA. Be sure to keep your PIN in a safe place. – Source
Page three says information was obtained from NSLDS regarding your loans. NSLDS is the National Student Loan Data System and is accessible to you for free. Visit nslds.ed.gov. So far the pages just show me information is being accessed that you already have free access to.
Page four is a limited power of attorney for them to act as your official representative.
Finally in page five we get to some meat and bones. While the agreement mentions fees, it does not say what the fees will be.
What it does say is that any fees you pay will be essentially non-refundable and fully earned when you sign the agreement and before they provide any service.
At the bottom you are waiving your rights to suing them if they do not deliver what is promised. You appear to be completely signing away your rights if the service does not live up to expectations. Without waiving your rights CLS will not enter into the agreement.
So how confident are they then they can really deliver what is promised?
The final page is for your credit card information so they can take their fee. The fee is still not defined.
College Loan Services Information
College Loan Services was only incorporated a little over a month ago. I wonder how much experience they really have with these services?
They claim to be located at:
16192 Coastal Highway
Lewes, DE 19958
That actually is the address of their registered agent and doubtfully where the business actually performs services.
The company does not provide a web address and I could not locate a website for College Loan Services in Lewes, Delaware.
At this point I’d have to consider the company is intentionally trying to hide who they really are.
What’s the Point?
When I run into these student loan assistance programs for government backed loans I’m always left with the same impression, what’s the point?
All of this help is available for free straight from the Department of Education. There is nothing this company is going to do for you that you cannot do for yourself.
I’m not even sure that a 25 year repayment program is in your best interest at all?
Please take a few minutes and read my free guide The Ultimate Guide to Dealing With Student Loans You Can’t Afford and review all of your options so you don’t make a long-term mistake that is not in your best interest.
And while I’m assigning homework, please read Student Loan Assistance Rescue Scams On the Rise – Buyer Beware.
Please post your responses and follow-up messages to me on this in the comments section below.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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