She told us that some debt relief companies promise to save borrowers thousands of dollars on their student loan debt — an offer that sounds too good to be true. Borrowers sometimes think the quickest way to deal with student loan debt is to pay someone to contact their creditors. When it comes to federal student loans, this may not be the best option.
Here are the reasons:
- Federal student loan borrowers can participate in alternative repayment plans, such as income-based repayment (IBR), at no cost to them.
- Debt relief companies do not have the authority to negotiate a “special deal” with your creditors under these federal student loan programs. Repayment levels under IBR and other federal income-based repayment plans are determined by federal law.
- Any contrary representation by a debt relief company may be misleading and may constitute an illegal act.
If you have questions about paying off your student loans, check out our Student Debt Repayment Tool to learn how to resolve your debt — even if you’re in default. You can learn about your options and what specifically you might want to ask for when speaking with a company trying to collect from you. We also have other great resources that can answer many of your student loan questions.
Even if you’ve fallen behind on your payments, you may have other options. There are also federal student loan repayment programs that can help you remove the delinquency information from your credit report. Be sure to familiarize yourself with the features our tool offers before paying a high fee for something you can get for free.
Do you still need help with your student loan? Then file a complaint.
Rohit Chopra is the CFPB’s Student Loan Ombudsman. To learn more about the CFPB’s work on behalf of America’s students and youth, visit www.consumerfinance.gov/students .
