A Company is Trying to Sell Me Student Loan Help
Posted August 7, 2013
WRAL Reader Question
I am currently in default on my student loan to the tune of $30,000. I was doing research on a company called First American Student Loan. I wanted to see what the reviews were and if there company was a scam.
Is First American Student Loan Company a scam and is it worth $700.00 they are going to charge me to consolidate my loan, use their lawyers to get me out of default status and enroll me in a Obama Forgiveness program?
And exactly who is HEESA, who currently holds my student loan debt, and do I have to pay them back or the original loan company?
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You ask some excellent questions. But I have to urge you to work hard and participate in searching to find the best solutions for your situation.
All debt relief companies, including non-profit ones, are interested in selling you whatever product or service they offer. Nobody makes money till something gets sold. While the consumer is looking for the best help available, the companies are trying to make the sale.
You simply can't just turn over your situation to any company without doing some homework to make sure you fully understand what the best solution is for you in your specific situation.
I've been concerned about the recent crop of student loan assistance companies. In my survey and review of the companies my conclusion was buyer beware. You can read my advice, here. The National Consumer Law Center came out with a more detailed report and concerns which you can read here.
The underlying trouble here is the student loan assistance companies make money by selling you something that might not even be appropriate for you or services you can get for free.
I have seen little indication in general the sale of student loan assistance by nearly any company is conditioned on best advice. For example, a lower payment is not always the best plan. I go into more detail about that here.
I am constantly puzzled by companies that charge people to consolidate their student loans when people can do it themselves for free through the Department of Education. It's also free to enroll in any of the income based repayment programs available for federal student loans. Maybe it's a process you don't want to deal with yourself and you want to pay someone else to do that for you. That's fine, as long as you know it is available for free.
HESAA is most likely the Higher Education Student Assistance Authority. They may be your loan servicer but if these are all federal student loans you can work through your current loan servicer or directly with the Department of Education.
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