EDU Loan Support

How You Might Qualify for Student Loan Forgiveness

In its report, "Searching for Relief," the NCLC found numerous problems, including: charging for services that are available for free; failure to disclose fees online or when initially requested; and providing inaccurate information about crucial topics such as consolidation loans and garnishment.

Most of these companies claimed to offer a broad range of services, but NCLC's secret shoppers didn't find that. They're not a counseling service, and they don't usually go through all the options available. They're usually selling loan consolidation, so they are going to steer you in that direction, no matter what." Loan consolidation is a good option for some people, but it doesn't work for everybody and may not be available to all borrowers.

NCLC's mystery shoppers also found that some companies charge a monthly fee that ranges from $20-$50 on top of the steep upfront payment. The report calls these fees "particularly suspect" since it's unclear what service, if any, the customer is buying on a monthly basis.

People are looking for debt relief, but they don't know where to get help. That enables companies to charge them for something they could do on their own for free. And while that's not illegal, it is against the law to make false claims about the nature of the service or lie about being affiliated with the government's Direct Loan Program.

Students should receive better counseling about their loan repayment options—especially students who are about to drop out of school. Dropouts are four times more likely to default and represent about two-thirds of the loan defaults, he said.

Students can consolidate their loans on their own for free at StudentLoans.gov. In 2008, Congress decided to require a similar notice for companies that charge to prepare the Free Application for Federal Student Aid (FAFSA) form, he noted.

Last week, Illinois AG Madigan told a congressional committee that these scams are the result of a larger problem—too many former students are having a hard time paying down their student loan debt. At the very least, she said, the Department of Education should create a public awareness campaign to get the message out to current and former higher education students that there are programs available that can help them.

"The scammers have advertisements and these advertisements are working," she testified. "We need ads highlighting real programs to counteract them."

The U.S. Education Department provides borrowers with information about their options and federal programs that might be able to assist them with repayment.

Do your homework before you do anything. Start with free options and be highly skeptical of any company that charges a fee and requires payment in advance. "Watch out for companies pretending to be blessed by or vetted by the federal government and watch out for companies that pretend to be part of a public repayment program.