For an explanation of our Advertising Policy, visit this page.Over the last month we have been getting bombarded with reader questions about student loan consolidation.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.Depending upon the total balance you are consolidating, you may extend the repayment period for up to 30 years with consolidation.
You’ve likely heard all this before, or, at the very least, you know there are consequences for missing payments, even if you don’t know what they are.Here are some of the companies we've been hearing a lot about lately: Don't think this is a definitive list. Check out our full guide on debt relief companies and scams to learn more and why you have to be careful in general.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.It has powers that far exceed that of regular, run-of-the-mill financial conglomerates.(To be clear, those financial conglomerates can garnish your wages, but first they have to sue you and win a judgement.) But whereas private lenders are limited in their tactics by The Fair Debt Collection Practices Act (they can’t call you after 9pm or before 8am, they can’t show up at your place of business, and they can’t talk to a third party about your debt), the government is exempt, and it’s lobbied to have its private contractors (i.e. In terms of your student loans, wage garnishment is basically the government’s last resort to get you to pay up. Wage garnishment happens only—and I can’t stress this enough—if you default.