Not everyone who goes to college is fortunate enough to have it paid for. A lot of parents can’t afford to fund college accounts for their kids and a retirement fund for themselves, and most financial advisors would tell you that your retirement should come before your kids’ college funds. After all, kids have lots of options to pay for college, including student loans. This is the only way many students can pay for college, but the resulting student loan debt causes serious financial strain when they graduate, and leaves many turning to student loan debt relief companies for help.
Student loan debt relief companies can provide different types of help depending on the type of loans you have—federal or private. The Department of Education also offers lots of free options for managing your student loan:
- Income-Based Repayment – Payment amounts are based on your income.
- Deferment and Forbearance – Allows you to delay repayment, but interest continues to accrue.
- Consolidation – If you have more than one loan, they can all be combined. You’ll get lower payments for a longer period of time but you end up paying more interest.
- Student Loan Forgiveness – Certain public service careers qualify for loan forgiveness; however, you have to make your loan payments for 10 years first and you won’t get that money back. In addition, you could be taxed on the amount that is forgiven.
- Student Loan Fraud Forgiveness – People who have been the victims of fraud or poor education may be able to not only get their loans forgiven but also get a refund for all the student loan payments they’ve made.
These options don’t require the services of a student loan debt relief company. If you have a private student loan, contact your lender to see what kind of help, if any, is available.
If you decide to enlist the help of a student loan debt consolidation company, you have to realize there are plenty out there that are scams. Here are some red flags to look for when you’re researching student loan debt consolidation companies:
- They ask for fees up front.
- They ask for your FAFSA PIN.
- They tell you to stop paying your student loan payments.
- They promise to get rid of your loan completely.
- They try to rush you to make a decision.
I’ve been pretty clear about this—research the heck out of student loan debt relief companies, tax debt relief companies or any other consumer debt relief companies. Read reviews, ask about them with your local consumer protection agency and make sure their licenses match your state’s requirements.
If you want some individualized help in coming up with a personal and comprehensive plan to deal with your financial situation and student loan debt, contact my friend and expert Debt Coach Damon Day.