Q: Are student loan forgiveness organizations legitimate?
I recently signed on with AFBC - a student loan forgiveness group (that is BBB certified with 1 review on BBB). They claim that they use lawyers to work through new student loan legislation in order to have mine forgiven after 10 years. However, I am worried that after 10 years my loans WON'T be forgiven. I am paying AFBC monthly with a very small portion actually going towards my loans. They claim that it is all legitimate and based on new laws that loan providers do not want me to know about. I even recorded a conversation with AFBC (the representative was informed I was doing so) and made her confirm that my loans will in-fact be forgiven after 10 years (and that my monthly payments will not increase). They do not have me under contract so I am wondering... is this a scam? They are charging me less than what was due monthly to my federal loan provider on my original pay-as-you-earn program (based on my income and the remainder is forgiven after 10 years).
A:
These places are usually scams. For government loans there a very, very limited number of way to forgive some debt (the biggest being serving on active duty in a war zone)--there is NO 10 year rule that triggers forgiveness. Private loans never forgive debt. Bankruptcy only allows debt elimination in very rare circumstances (you need a special court hearing and 5-10 years after the loans were taken out).
The best option is to look into way to look into ways the defer or extend the term of the loans maturity. The federal loans have their own system (and you can apply without assistance), the private loans are discretionary. If you choose this path make sure to carefully review all the data and financial consequences. You may want to consult with an attorney or financial advisor. Also, some schools have a councilor to assist alumi.
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