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Some consumer debt relief firms mislead those with student loans

Student loan debt has continued to climb to record levels. While there are several programs offered by the government that can help lower student loan payments, many borrowers aren't even aware of them. Trying to get through the red tape isn't easy either.

Now, several debt relief firms are milking many with student loan debt out of hundreds and, in some cases, even thousands of dollars in order to get payments lowered. Some of the consumer debt relief companies are allegedly charging fees that may be as high as $1,600 initially or monthly fees that are $50 a month in order to access services that those with student loans could access for free.

The National Consumer Law Center contacted 10 companies that advertised student loan debt relief. After carefully reviewing the companies' websites, contracts and complaints filed by consumers, they found that in many cases, clients weren't told that things like loan consolidation were part of free programs through the government. In addition, some of the firms would advertise themselves as being student loan experts, even though the NCLC found many inaccuracies on the companies' websites.

The NCLC has asked state and federal regulators to investigate the companies. In addition, a suggestion was made that the government administrate these programs better -- such as the ones for repayment and consolidation.

When you're bogged down with debt, sometimes you just want to hear that there is a way out. Unfortunately, student loans cannot be discharged during bankruptcy in most cases. However, there are repayment programs that can help lower your payments. Bankruptcy may still be a viable option for Washington, D.C., residents, though. It could help you get rid of other debt and make your student loan payments more manageable.

Source:  KMOV, "'Debt relief' firms misleading student loan borrowers" No author given, May. 16, 2014

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