Financial Experts Advise on How to Avoid Student Loan Dept

Published 07/14 2014 06:34PM

Updated 07/14 2014 06:40PM

EAST PEORIA - Illinois Attorney General Lisa Madigan is fighting two companies she claims are taking advantage of people with student loan debt.

First American Tax Defense and Broadsword Student Advantage promise student loan relief with creative, online ads.

It’s no secret that the cost of college is higher than it’s ever been. Lisa Madigan says there’s 1.2 trillion dollars in student debt right now.

“The cost of an education continues to soar and I don't think a lot of people have necessarily planned accordingly,” says Beth McClain, Director of Student Financial Services at ICC.

All that debt opens the door for more and more scammers.

In the past it's always been around tax time offering to release your debt to the IRS. Now it's just taking on a new spin targeting student loans,” said Jessica Tharp of the Central Illinois Better Business Bureau.

They’re using flashy, online ads to prey on the desperate.

“Most of these people are really big on social media,” continues Tharp.

But there are ways you can prevent your student loan payments from getting out of hand in the first place.
Advisors at Illinois State University tell their students to do their research before taking out a loan.

“Doing as much research online that they can about the product. Contacting the lender themselves about all the fees associated with it,” said

ICC stresses that anyone with student loans to pay them off on time because you could go into default. And that leads to big financial problems.

“Once you get into default which is basically missing payments for up to 300 days, you're then defaulted up to your student loan,” said McClain. “It's one of the debts that you have to get rid of no matter what your financial circumstances are.”

If you do struggle with payments contract a trusted loan service and change your repayment plan.

“It's best to make those arrangements and be good on it than to just let it go and ignore it because the problem won't go away.”

Otherwise, you’ll be a prime target for scammers.

The Better Business Bureau also told us the two groups Madigan is suing received the agency’s worst possible rating.

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