Back in 2010, a Federal Reserve report showed that outstanding student loan debt surpassed outstanding credit card debt. And not too long ago, outstanding student loan debt passed the $1 trillion mark.
Students attending university often have to take out federal and private student loans  in order to pay for the rising cost of education. With so much student loan debt out there, there are shady characters popping up to offer debt relief.
Students who don’t understand that they have forbearance and deferment option s, as well as income-based repayment  on federal loans, might find themselves in worse trouble if they are caught up in student debt relief scams.
What are These Debt Relief Scams?
The National Consumer Law Center  reports that an increasing amount of ads for student loan debt relief are popping up, and that the scams, while they might not be technically illegal, still engage in shady practices that mislead those drowning in student loan debt — and may even charge high and unnecessary fees.
Here are some of the hallmarks that the National Consumer Law Center says identify some of these debt relief practices:
- Hidden Fees: You might not get all the information about the fees charged, or the fees might be hidden in the fine print of a long and confusing contract.
- High Upfront Fees: The study from the National Consumer Law Center found that some services charged $1,600 up front. And that some monthly fees were as high as $50.
- Claiming Federal Programs as Their Own: Many of these debt relief services simply help you make use of federal programs that already exist to help you afford your student loan payments. You can access these programs on your own without the need for high-cost intermediaries.
- Arbitration Clauses: To use a number of these debt relief services, you might be required to sign a mandatory arbitration clause. This protects the debt relief company by requiring you to go through arbitration, rather than take your case to the courts.
You might also be required to give Power of Attorney to the debt relief company, and you might be subject to high pressure sales tactics. These issues can lead to the loss of money, and land you in a worse position than you are already in.
Avoid Answering Ads for Student Loan Debt Relief
There are programs out there that can help you manage your student loan debt. However, most of them aren’t accessed via spammy ads all over the Internet. Before you click on an ad online, go to the web site that the government  has set up to help you manage your federal student aid.
Student loan consolidation through more official channels is much more cost effective. There might be a one-time process fee, but it usually isn’t very onerous, and it’s included in your repayment schedule to make it more manageable. You don’t have to pay a huge fee up front — and you won’t have to pay the recurring fees that some student debt relief services charge.
There are plenty of ways to get the help you need with your student loan debt, from consolidation  to deferment. Go through the web site offered by the federal government for best results. You’ll get the best deal, and you won’t be subject to high pressure and questionable sales tactics.
(Photo: James Almond )