Nearly 7 million Americans are behind on their student loans, and millions more struggle to make payments each month, contributing to the rise of a questionable new industry that offers to help borrowers deal with the debt. Many companies claim to help reduce or even eliminate debt from government-backed student loans. However, Terrence Banks of ClearPoint Credit Counseling Solutions says company advertisements prey on consumers' emotions, promising relief when they often only make a situation worse.
The aid that these companies offer for a price is almost always available from federal programs at no cost. The National Consumer Law Center report "Searching for Relief" found many problems with debt relief firms. They include providing consumers with inaccurate information, failing to disclose prices and fees for their services, and claiming to provide a range of services when most offer only loan consolidation. The solutions offered may not be appropriate or available for all consumers. The Consumer Financial Protection Bureau has an online tool for federal loans, Repay Student Debt, that lets students find the best option for dealing with their loans -- even if they are already in default. Additionally, the nonprofit Student Loan Alliance's StudentLoanHelp.org allows users to talk one-on-one with a trained student loan counselor for free.