All Student Loan Debt Consolidation Companies May Not Be The Same

Student loan debt consolidation is on the rise. Like the housing bubble that found millions of homeowners upside down on their mortgages and left with no other option than to walk away, college graduates are holding an average of $27,000 in students loans. Racked with post-college debt and finding themselves unable to make the costly monthly payments associated with their education loans, people are turning to loan consolidation as a means to finding student loan relief.

With the overall amount of student loan debt now surpassing credit card debt in America, companies are popping up offering post-grads a way to consolidate their federal student loans, make one monthly payment, and lower there payment by extending their loan terms. Consolidation applies to federally funded loans only. Private loans, which make-up about 3% of all student loans held, cannot be combined with federal student aid loans.

Concerns have been raised as to the integrity of some of these "debt relief" companies that can be found on radio and late-night TV ads. Some of those firms are promising nothing short of making people's student loan debt disappear while often times offering to take their credit card debt as well. While many companies out there are legitimately working to help unemployed or underpaid graduates find a better way to tackle their post-secondary debt, not all of them are being upfront about the services they offer. The concern is that these companies are charging a fee for a service that the customer could do on their own for free. Consumer groups are worried that student loan help may come at a much higher price then one is first led to believe.

Skepticism comes when student loan debt consolidation companies fail to prominently disclose the fact that the programs they are using are actually federal government programs that anyone can apply for at no cost. The National Consumer Law Center (NCLC) says that although not all of these debt relief and consolidation companies are misleading, they may be layering fees onto debts that consumers are already struggling to pay. Although there should only be a one-time charge with enlisting a student loan consolidation service, some of them are charging reoccurring monthly fees.

Enlisting a debt consolidation service for help with student debt relief is not always a bad thing. Consumers looking to do so should do some research before committing to a service. Look at companies online, read reviews by other people who have used student loan debt consolidation services before, ask plenty of questions and make sure you are aware of all fee involved. If they are reluctant to answer questions, that could be a warning sign. Move onto another company.

Check out the Better Business Bureau's website to see if there are any complaints filed against the company you are thinking about using. If so, find out what the complaints were and if and how they were resolved. Educate yourself before entering into a contract and make sure you are comfortable with the terms being offered.

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