If you are struggling with your student loan payments or have fallen behind on your debt, you may be in full-on freak out mode. Many people tend to take a head-in-the-sand approach to dealing with their troubles, but this is the worst thing you can do. Even if you’re willing to deal with your student debt dilemma, you may be nervous about talking to your loan servicer and may think you need a representative to speak to them on your behalf.
For-profit debt relief agencies have their stock in trade in debtor fear and anxiety. Typical debt relief company advertisements – on TV, in print and on the web – assert that they can cut you a better deal on your debts for “pennies on the dollar.” They may be able to negotiate a deal with a credit card company or other debtor (and that’s still a big maybe) but they will not be able to get you a better deal from your student loan servicer than you can get for yourself.
Federal student loan servicers have non-negotiable guidelines to deal with past due student loans, repayment problems and other debt crises you may experience while repaying your educational debt. Credit relief agencies have no special powers, no inside track and no skills that will empower them to operate outside of federal law to get you a better deal.
Just as some firms charge fees to complete your FAFSA, plenty of agencies will queue up to try and get you to sign on with them to deal with your debt. Even for debts they can (possibly) make deals on, such as credit cards or other unsecured debt, the fees you will pay will likely end up costing you more than if you had simply paid your debts in full.
As we wrote yesterday, if your student loans are in default, there are several strategies you can take to rehabilitate your loans and get back on the right track or explore discharge or cancellation. These are all things you can do with no outside help. If you want to explore trying to get your loans forgiven in bankruptcy (which is possible depending on your circumstances), you will likely do better with an attorney. But other than that, you can deal with your past-due debt on your own.
If you’re behind on your student loans by less than 270 days, you are not yet in default and rehabbing your loans will be much simpler. But even if you have gone beyond the critical 270 day mark and are in default, all is not lost. No matter what your circumstance, communication is your best weapon. Don’t pay top dollar to a debt relief agency for what you can easily take care of for yourself.
Contact your loan servicer, explain your financial situation and ask what can be done. They will tell you what your alternatives are and you can go from there. Check out our blog for lots of information about repayment strategies and alternatives and for step-by-step guides on how to apply for alternate payment plans, consolidation and more, check out our Student Loan Help Center! And be sure to sign up for our free student loan management and optimization tool to help you stay on track.