Companies that peddle student-loan debt-relief services insist that they are rescuing borrowers from red ink and red tape. But what’s their pitch to prospective customers?
I called four of the companies to find out. I didn't mention The Chronicle,but I told them, accurately, that I am a recent college graduate and an intern in the private sector, and that I owe $27,000 in federal student loans.
What I heard was a common script performed again and again by the "student loan specialists." It was a script that contained some holes.
Within the first five minutes of each call, the customer-service representative described his or her employer’s tight relationship with the federal government. "Mary," at Broadsword Student Advantage, told me that her company was "tied to the Department of Education." And "Angelee," from Student Loan Relief Inc., said her company worked closely with both the government and loan servicers to ensure that the loan consolidation was a smooth one.
When I asked if I could consolidate my loans at no cost, the representatives said I was welcome to try. They also told me that the process was very complex, and that the Education Department wasn't likely to help out. Even worse, they said, if I made the slightest error on my application, it could cost me big money. Three representatives likened themselves to tax preparers.
"The best example I can think of is H&R Block," said "Howard," of National Student Loan Solutions Inc. "H & R Block handles filing taxes. We take care of your paperwork and processing and monitoring."
Angelee echoed that theme: "You can do it for free, just like you could do your taxes for free. We do what tax attorneys do. We know the tricks to get the highest amount of loan forgiveness."
To the uninitiated, those arguments might sound valid. But unlike the federal tax code, student-loan consolidation is straightforward: Complete a three-page application, send it to a servicer, and see if you qualify. And unlike a mistake on your tax return, if you are denied because of an error on the application, you can reapply the next day.
What's more, while many companies use the prospect of loan forgiveness to entice borrowers to call, they don't tell the whole story. The application for public-service loan forgiveness, the most relevant program for many debtors, is just two pages long.
Read more at The Chronicle of Higher Education: http://chronicle.com/article/I-Called-4-Companies-for/148007