Student loan debt consolidation is not all it’s cracked up to be.
State Attorney General Kamala Harris has issued a consumer alert as her office gets a growing number of complaints. Harris says private companies are charging borrowers upfront or monthly fees for FREE federal loan benefits while offering “student debt management” or “student loan consolidation” plans. She says the companies may claim that they have a special relationship with the Department of Education or that a special governmental loan consolidation will be ending soon. They will charge an initial application fee as well as a monthly service fee. The Attorney General points out that consolidating federal student loans is FREE and can only be done through the Federal Direct Consolidation Program. A Direct Consolidation Loan will combine multiple federal student loans into one loan, resulting in a single monthly payment.