Processing Loan

Over the last month we have been getting bombarded with reader questions about student loan consolidation. It seems that a lot of companies are advertising on TV and other places that they can “help you consolidate or get rid of your student loans”. But you know what? That help comes at a cost – and it’s a cost that you don’t need to pay to get help with your student loans. While these companies aren’t necessarily student loan scams, they are taking advantage of you because they are making you pay for something you don’t need.

Here are some of the companies we’ve been hearing a lot about lately:

• Student Processing Center
• Student Loan Processing Center
• Nationwide Processing Center
• SLC Processing Center
• Student Aid Center
• Student Loan Resolve

What’s great to see, though, is that the Consumer Finance Protection Bureau (CFPB) has been taking action against these types of companies. .

Right now though, let’s break down these student loan debt consolidation companies and talk about why you should be avoiding them.

What These Companies Are Charging You For

First, I want to make clear that these companies aren’t fraudulent. Rather, they are charging you for a service that you really don’t need to pay for. They use marketing tactics to make you think that you have to pay for their services to get student loan consolidation, but you don’t.

If you read on these companies’ websites, they will be doing the following for you:

• Determine the best student loan consolidation programs for you
• File all the paperwork
• Working with you if you’re in default
• Answer your questions

When you sign up with them, one of the first forms you fill out will be a Power of Attorney form. This gives the company legal rights to act on your behalf with your student loan companies. That’s scary that you’re letting these people act on your behalf! Just do it yourself.

The trouble is, you shouldn’t be paying someone for this! You can fill out the paperwork yourself. As for the best student loan consolidation program? You have one option for Federal student loans – just one. So what are they really helping you with?

The scary part? These companies are charging anywhere from $300 to $1, 500 to “help” you with your student loan debt. In fact, I recently heard from a reader that they were encouraged to charge this on a credit card (i.e. go into more debt) to pay for their service. Crazy!

How You Can Do It Yourself

The bottom line is that you can do it all yourself without paying their fees.

First, if you have Federal student loans, you only have one way to consolidate these loans: a Direct Consolidation Loan. This loan is available for free through the U.S. Department of Education. You can learn more and apply for it here: .

Second, if you have private student loans, you do have more options to consolidate, but even then, I really only want you to look at one option – Credible. This site gives you a free saving estimate of what you could save by consolidating and refinancing your student loans in 30 seconds. Then, if you go forward with your private consolidation, you can receive and compare offers from many lenders after completing a single short form.

Finally, make sure that you don’t consolidate Federal and private loans into a single private loan. Keep them separate. You get a lot of benefits from your Federal student loans, and you lose them if you merge them into a private student loan.

Have you fallen for any of these companies? Are there any other ones we should know about?

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