It seems that there are advertisements for companies that promise to get your student loan forgiven everywhere these days. Since the average student loan debt for graduates is now almost $30,000, the idea of having that debt forgiven is extremely appealing. Nevertheless, beware. If it sounds too good to be true, it most likely is a scam. Although the government has developed a few programs to forgive student loan debt for people who meet specific criteria, the majority of advertisements are for companies who merely consolidate the debtor’s loans. While consolidating loans can be advantageous for some, it can also result in the debtor losing some benefits of the original loan (in some cases, the ability to have the loan forgiven). These companies generally charge a fee up front and sometimes charge hidden monthly fees.
Before paying a company to have your student debt forgiven, research the government approved debt forgiveness programs. The Consumer Financial Protection Bureau and the Department of Education provide information on student loan debt forgiveness programs. If you think you may qualify for one of these programs, make sure the company you choose has a good reputation. Check the Better Business Bureau for reviews and google the company to see what previous customers have said about their services. Finally, trust your instincts. If something doesn’t feel right, find a different company.
If you do not qualify for a government approved debt forgiveness program and are having difficulty making monthly payments, talk with your lender. Most companies prefer to work with you than have you default on your loan.
-Kathryn M.
Sage Personal Finance 