9 ways to spot — and avoid — a shady student loan 'debt relief' agency

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  • Digna Paschall CA, CA
    April 9, 2016 8:42 p.m.

    My children were wanting a form last month and were informed of a great service that hosts a ton of fillable forms . If you are interested in it too , here's a link http://goo.gl/Ms4ebj

  • JanMiller1 Ashland, OR
    March 28, 2014 9:58 p.m.

    Student loan consolidation can raise your interest rate up to .125% (as the feds round up your weighted average to the nearest 8th of a percentage), prevent you from targeting your higher rate loans, disqualify you from certain types of repayment assistance (including some deferments and Income Sensitive Repayment), and lengthen your term from 10 to 25 or 30 years (sometimes tripling the interest you pay over the life of the loan).

    I'm only scratching the surface here when naming good reasons for alternatives to student loan consolidation.

    In sum, I appreciate your viewpoint and your contribution. Thank you for your feedback, and please feel free to call me anytime with any further questions. My phone number is on my website, and I'm happy to help.

    Kind Regards,

  • JanMiller Ashland, OR
    March 28, 2014 9:51 p.m.

    Red flag #4: There are a myriad of other responsible ways to lower your payments and/or manage your loans besides consolidation.

    For defaulted borrowers, loan rehabilitation, if feasible, is preferable to consolidation, since the borrower’s credit report is adjusted and the default removed after student loan rehabilitation -- where it is not after the consolidation of defaulted loans. It is always wise to improve your credit history whenever you can.

    For defaulted loans, rehabilitation should always be your first choice if you can satisfy the 9 required payments, which by the way, are often the same as the IBR payments established on the consolidation loan.

    Borrowers with loans still in repayment can take advantage of existing repayment options such as forbearance, potentially a dozen deferments, Income Sensitive Repayment (not to be confused with IBR and ICR), loan refinance and/or loan collapse.

  • JanMiller Ashland, OR
    March 28, 2014 9:50 p.m.

    When filling out your Direct Consolidation Loan application, you can contact Direct Loans at 1-800-557-7392 and they will assist you, for free. Direct Loans will help you complete the application. Only after your consolidation loan is established will you be assigned to whichever servicer you choose - which includes Sallie Mae, Nelnet, Fedloan…etc.

    I’m keenly aware of the difficulties borrowers have communicating with their lenders and servicers. It's one of the reasons I created my company. However, when basic consolidation loan application questions arise, Direct Loans is more than capable of answering them.

    A vast majority of the questions asked to borrowers are simply personal questions that only the borrower can answer anyway. DOB, SSN, Driver’s license number, employer. In fact, the application even pre-fills all of your loan information. Yes, there may be a few ambiguous questions. So, they can simply ask. There is no need for a borrower to pay someone $500 to fill out an app for them.

  • JanMiller Ashland, OR
    March 28, 2014 9:49 p.m.

    Anyone working with student loan borrowers ought to realize that they are not only dealing with student loan regulations -- they are also dealing with people’s debt. Therefore, one should not only have direct Title 4 and federal student loan regulation training, but also, the financial experience necessary to properly advise individuals on what they are doing with their money.

    Now, about those flags.

    Red Flag 2: By stating that there is only one place to apply for direct student loan consolidation, I am intending to say that there is only one organization that does it. You can eventually get there through studentloans.gov, just as you can with Google.

    So, there may be a few ways to get there, but it amounts to the same process. The reason this is important to understand is that many debt relief agencies imply that they are consolidating the loan, rather than the truth -- which is that they are really only doing the data entry.

  • JanMiller Ashland, OR
    March 28, 2014 9:48 p.m.

    Hi Jason,

    Thank you for your response. It gives me the opportunity to elaborate on this important subject and address your questions.

    Let me answer your last question about credentials, first.

    As far as those go, I have about 17 years of experience in the industry. I started working for the student loan servicer, Nelnet, back in 1997, and later spent time working for private student loan lenders, Citibank and Discover Financial.

    I have been helping borrowers with their student loan debt and building relationships with the USDOE and many other student loan institutions for 14 years now. I not only provide student loan consulting services for borrowers, but also for tax attorneys, financial planners, hedge funds, credit counseling services and employee assistance programs, to name a few.

    I also have a strong financial background, including 6 years as an investment advisor with Morgan Stanley. You may check out my full bio on my website, www-student-loan-consultant.com

  • Jason B Tampa, FL
    March 27, 2014 2:12 p.m.

    Part 3
    Red Flag # 4 Please tell me, outside of Rehabilitation what are the other options? Red Flag # 5 I agree with an ethical approach. That's my comment on that! Red Flag # 6 Agreed 100% Clarity is an absolute in any business relationship. If you are offering a service all Fees associated should be made crystal clear. Red Flag #7 100% agreed. This has been an ongoing issue. "A lack of education". Why is that? Simple, when you have any entity (The servicers) who's sole purpose is for the student to default on the loan because that's where the highest level of revenue is generated, than yes they will not educate the student on how to lower payments and stay current! This should be the servicers job.I do agree that there is a lack of education from companies trying to assist students in the consolidation process. Red Flag #9 I'm curious as to know what credentials are associated to student loans. What exactly are your credentials other than the president of your company? I wasn't aware of any credentials associated in the student loan world. Well educated? Yes. Experience? Yes? Credentials? Never heard of any! Thanks for the conversation!

  • Jason B Tampa, FL
    March 27, 2014 1:45 p.m.

    Part 2 Continued

    What makes you or anyone else think that the relationship between the servicer and student is very romantic? Lets discuss Red Flag #2 You say "Fedlaon Servicing application". Are you stating that all loans are serviced now through Fedloan? The application for consolidations today are titled Direct Loan Consolidation Application. Fedlaon is a servicer as well as Great Lakes, Nelnet, and the biggest crooks of them all SallieMae. Do you work for Fedloan hoping to promote your company? Borrowers can choose who they want to service their loan! As far as the process I love your enthusiasm stating the process is easy. You must do this every day! It's easy for a lawyer to defend one in court because he studies law everyday. I consolidate loans all day and it's easy for me as well. However, for the average consumer to make an effort to accomplish this on his or her own with a servicer who generates more revenue when they default is a conflicting cause for the student. Red Flag #3 I haven't heard of any company doing this but I am sure they exist. To be continued...

  • Jason B Tampa, FL
    March 27, 2014 1:24 p.m.


    Part 1
    I want to thank you for taking the time to stress your opinion in this matter. I have been in this business for over 17 years and I would like to comment on how far off you are on the majority of what you have stated here in this article. I agree Red Flag #1 Consolidation companies do not need a power of attorney to process a consolidation. You are wrong in saying there is 1 place to file a consolidation. What about studentloan.gov? The main website that the DOE sends students to? You are 100% accurate that this is a free program. Students have never had any fees associated with consolidation. But today you have servicers who have hire 2 of the largest collection agencies (USA Funds and General Revenue Corporation) as in-house collection agencies. Why do I mention this? Well, you state that the servicers will help student during the consolidation process? How about the fact that servicers are getting paid 1 time on current loans and getting paid 3 times on defaulted loans? You didn't mention that anywhere in this article. This is how the DOE grossed 40Billion and some change in 2013. To be continued in Part 2

  • SushiSings Miami, FL
    March 26, 2014 1:41 p.m.

    What a helpful article. I never thought to consider #4 (options beyond consolidation) and #8 (hiding behind a website). Good to know as I face my student debt repayment -- thank you.