With approximately $1 trillion of student loan debt currently outstanding and 7 million borrowers currently delinquent on at least one student loan, it's clear that student loan borrowers are in need of repayment assistance. Unfortunately, many borrowers are looking for help in all the wrong places.

Baiting Uninformed Borrowers

Debt settlement companies have in recent years turned their sights to student loan borrowers, employing questionable and perhaps illegal tactics to win their business. In the past year, the Consumer Finance Protection Bureau issued a consumer advisory warning student loan borrowers about the misleading practices of debt relief companies.

A number of states have begun investigating and/or warning borrowers about the potentially deceptive tactics of these firms, and Illinois recently became the first state to actually bring suit against two student loan debt settlement companies. The suit alleges that the companies in question duped borrowers into paying hefty fees for student loan services that were never delivered. Consumers were allegedly promised "special deals" on their student loans. However, debt relief companies cannot negotiate alternative repayment terms on federal student loans, as they may be able to for credit card or other private debt. Those terms are dictated by federal law. Some companies even feign a non-existent relationship with the federal government one company allegedly advertising an "Obama Forgiveness Program," while no such government-sponsored program exists.

Government Student Loan Support

Borrowers could have accessed real and legal repayment assistance for free from their federal loan servicer, if they'd only known how to access it. The Department of Education offers many programs that can assist borrowers struggling with repayment:

• Economic Hardship Deferment or Forbearance: temporarily halts (or minimizes) payments while a borrower is going through a tough financial time
• Income-Dependent Repayment Plans: caps monthly payments at 10 or 15 percent of a borrower's discretionary income
• Extended Repayment Plans: stretches payments out over 25 years, minimizing monthly payments (though costing more in interest in the long run)
• Federal Loan Consolidation: allows borrowers with multiple servicers to bring all their federal loans together (minimizing repayment confusion) and stretch repayment out over up to 30 years
• Public Service Loan Forgiveness: forgives remaining balances on eligible loans for public service workers after 120 eligible on-time payments

The Solution: Savvy Borrowers & Student Loan Awareness

Unfortunately, many borrowers are unaware of these federal loan repayment options and fall prey to debt settlement companies' misleading tactics. In order to raise awareness of borrowers' loan repayment options, President Obama recently signed an executive order requiring the Department of Education to engage in more public outreach efforts, as well as renegotiate contracts with federal loan servicers to provide financial incentives to servicers who help borrowers avoid loan default.

Employers can do their part as well by providing comprehensive college planning including loan repayment assistance to employees, ensuring that their workers have the information they need to take control of their finances and remain engaged at work, not fall victim to predatory debt settlers who only fan the flames of financial stress.