With existing student loan debt surging to well over a trillion dollars, many former students are looking for help managing their debt.
One way people do that is by consolidating their existing loans into a Direct Consolidation Loan, which results in a single monthly payment instead of multiple payments to multiple servicers.
“What we’re seeing more of are situations where people are led to believe they need assistance consolidating their student loans,” said Susan Adams Loyd, President and CEO of BBB of Minnesota and North Dakota.
“Unfortunately, what many of these companies offering their help are actually doing is helping themselves to hefty fees for services people can perform themselves, for free, at ” A lot of companies claim to offer assistance to students as far as consolidating their loans and learning about relief programs they may qualify for – such as Public Service Loan Forgiveness or the Stafford Loan Forgiveness Program. Some of these companies even ask students to provide their Federal Student Aid (FSA) ID, which puts them at risk of identity theft. “Our office has seen an increase of student borrowers contacting us with concerns about the personal information shared with these companies,” said Betsy Talbot, Manager of Licensing and Registration for the Minnesota Office of Higher Education.
Essentially what happens when you consolidate is that all of your original loans are paid off by your lender and replaced with a single new loan with new terms.
And you can often get a lower monthly payment because you will have a longer repayment period – so there are some trade-offs to keep in mind.
With an average balance of $28,400, student debt is a big part of the average college graduate's life.