Let’s face it: The sheer numbers and dollars associated with student loans attract the attention of everyone from legitimately concerned financial professionals—like our agency members—to the moderately unscrupulous and outright scam artists.
Whether you are a recent graduate still enjoying your six-month grace period on repayment, an enrolled student or a borrower struggling to make your monthly payments, these five tips can help you separate the good advice from the bad.
- Be suspicious of upfront fees. Lenders don’t charge upfront fees, nor do counselors. Also, understand that there are no “special relationships” that lead to “negotiated” interest rates or payments. Rates can be minimized through a well-researched selection of programs, including loan consolidation when allowed.
- Student debt is rarely discharged. There are a few rare avenues for eliminating debt, but they are unavailable to most borrowers. This is why offers to eliminate your debt for a fee should be treated with great skepticism.
- Consolidation can help but not always. The Federal Direct Consolidation Program allows student loan consolidation that can lead to lower payments and possibly a lower interest rate. But, the resulting consolidation remains a government loan. When a firm offers consolidation into a private loan, be wary. It’s rare that a private loan would offer better terms than a government loan.
- A loan in default cannot be fixed for a fee. If you are dealing with a default, call your lender or contact a certified financial professional to facilitate the discussion with your lender. Someone cannot simply intervene on your behalf and fix things for you. And, you should be especially concerned if someone ask for money upfront to do what you can technically do yourself for free.
- Follow the money. As with most matters involving your money, verify before you trust. Research any company you are thinking about contacting, our member agencies included. Look for complaints on Yelp.com, with the Better Business Bureau and through general online searches. Also, make sure you understand how the agency or company offering its assistance pays for its own operation.
When it comes to student loans, it’s not a case of “you get what you pay for.” It’s about getting advice from experienced and preferably certified specialists with a deep understanding of the student loan programs. Often, that advice is free.