Informational post:

http://www.deseretnews.com/article/865599510/ ... ncy.html?pg=all

9 ways to spot — and avoid — a shady student loan 'debt relief' agency
By Jan Miller
For the Deseret News
Published: Thursday, March 27 2014 10:59 p.m. MDT
Updated: Thursday, March 27 2014 10:59 p.m. MDT

Many young borrowers across the U.S. are facing feelings of desperation and confusion about their thousands, sometimes hundreds of thousands, of dollars in outstanding federal and private student loan debt.
In response to their vulnerability, a new student loan “debt relief” industry has sprung up, with dubious offers and credentials.

These agencies are promising help and relief for borrowers from their student debts; but with investigations running rampant for misleading advertising, improper fees and questionable contracts, these agencies are offering anything butrelief.

Consumer advocates are duly concerned, with both the Student Loan Protection Unit and Consumer Financial Protection Unit taking action to investigate and stop these agencies from causing more financial harm to young borrowers.

Though this topic has been covered throughout media channels, what many have failed to mention is that, with proper caution and awareness, borrowers and their families can successfully avoid falling prey to these unethical agencies.

Read on to learn nine tell-tale ways to spot and avoid a shady debt relief agency.

Red flag No. 1 — they require power of attorney.

It is not standard practice for a lender to require power of attorney in order for a borrower to take out a loan. In fact, a person should never be required to provide power of attorney for any loan unless there is a specific need for it, such as Alzheimer’s or dementia.

Unethical debt relief agencies need power of attorney so they can complete a FedLoan Servicing application on an applicant’s behalf. First, they’ll ask a borrower for all of the information that the borrower would have to input on Fedloan Servicing’s website. Then they’ll fill out the application for the borrower, acting as the borrower.

Shady student loan debt relief agencies are charging hundreds of dollars and more for this simple maneuver.

There is only one place that every borrower — even those with great credit — can consolidate within the federal student loan consolidation program. This is through the U.S. Department of Education’s online consolidation application, Federal Direct Consolidation Loans (loanconsolidation.ed.gov).

Completing a consolidation application is something a borrower can do online anytime for free.

Red flag No. 2 — they try to convince borrowers it’s too difficult to do alone.

In truth, the FedLoan Servicing application is fairly straightforward. Plus, Fedloan Servicing has recently made improvements to make the application process quite intuitive and easier to complete.

The online application only takes about 20 to 30 minutes and can be filled out anytime. If borrowers have any questions on it, they can call FedLoan Servicing directly and receive help through the process.

Red flag No. 3 — they offer a year of no payments for the first year after consolidating — as a “unique” service.

When debt relief agencies offer this “special” benefit, in reality, there’s nothing unique about it. What they’re doing is putting a borrower’s loans in general forbearance, after their consolidation is complete. This is also something any borrower can also do online themselves for free, at FedLoan Servicing's website.

Red flag No. 4 — they offer consolidation — andonly consolidation — as the one-size-fits-all solution to any student loan debt concern.

Most student loan debt relief agencies push consolidation as the single solution to any student loan debt issue. They conveniently neglect to inform a borrower that besides consolidating, there’s an abundant variety of repayment options that are readily available to them, even if they are a little past due on their federal student loan payments.

Obtaining more information about their repayment assistance possibilities is a matter of doing careful research and speaking with a trusted professional — one who has direct experience in the student loan industry.

Red flag No. 5 — they are pushy and use sales tactics.

Shady student loan debt relief customer service representatives are often pushy and in a rush to sell borrowers on consolidating their loans. They might even offer a “limited-time offer” in order to get borrowers to make an impulsive financial decision.

Keep in mind, the customer service agents at these companies are often well-trained sales representatives and have their bottom line, not a borrower’s financial benefit, in mind.

Red flag No. 6 — they are ambiguous and/or dishonest about their fees.

Many shady companies tell borrowers that the cost for their help will vary, depending on the level of legal work involved and the amount of the debt the borrower has. They may also claim that monthly fees are required, in addition to a lump sum that must be paid up front — all for a consolidation.

This is a big red flag that borrowers should steer clear of. Anytime an agency is dishonest or ambiguous about its “ongoing” fees is a big warning sign of that agency’s lack of integrity. (Source:http://www.nclc.org/issues/searching-for-relief.html )

Red flag No. 7 — they don’t educate borrowers on their options.

Unethical debt relief agency reps rarely take the time to educate a borrower on what consolidation really means, on the different types of consolidation and whether it’s really right for them at this time.

Consolidation has a number of benefits for the right candidate, but also a number of significant drawbacks for unideal candidates.

Red flag No. 8 — they hide behind a website.

Many borrowers are so desperate for assistance that they are willing to give their financial and personal data to a complete stranger on the telephone.

Most shady debt relief agencies hide their representatives' photos and direct phone numbers behind their websites for good reason. Instead of forming a person-to-person relationship with you, it benefits them to keep their anonymity behind red tape.

Red flag No. 9 — they have insufficient or no credentials.

Most borrowers do not think to ask a customer service representative for their credentials — and they really should.

Often, these reps are simply salesmen, not student loan experts. Sometimes, debt relief agencies will claim to have a financial planner or lawyer as their source of expertise, and/or a group of individuals who keep "up to date" on student loan matters.

In reality, the best candidate to guide you with your student loans is someone who has dealt with student loans directly and is completely open about professional background and experience.

Above all, the most important indicator borrowers have is their gut feeling. If any person a borrower speaks with does not take the time to help them feel at ease and more empowered about their financial decisions, he or she is not the ideal person to tackle any aspect of the borrower's student loan repayment.

Jan Miller is a student loan consultant and president of Miller Student Loan Consulting. He helps borrowers customize their repayment strategies to fit their budget, plans and life. EMAIL: [email protected]