Student loans

Beware: You Don't Have to Pay for Help With Your Student Loans

Why doing your homework could save you thousands of dollars

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Sara Jenkins from Inwood, West Virginia, graduated several years ago from college, but like so many college graduates, she owes thousands of dollars in student loans. Jenkins had 14 loans totaling more than $80,000.

“I haven’t paid at all on them because the monthly payment’s like $600 and I don’t have $600 a month,” said Jenkins. Her loans are in forbearance, which allows her to pause making payments.

To provide relief to student loan borrowers during the COVID-19 emergency, federal student loan borrowers were automatically placed in forbearance, which allows you to temporarily stop making monthly loan payments. This suspension of payments expires on Sept. 30, 2021. 

This means some may need help when those bills start arriving again. 

Jenkins responded to a “final notice” she received in the mail that offered to consolidate her loans and reduce her payments, although she says she never received any earlier letters. “I guess the final notice was just their way of grabbing my attention,” said Jenkins.

She thought the letter was affiliated with the U.S. Department of Education so she called the number on the letter. Jenkins said the representative told her for $800 they would consolidate her loans and then deduct $39 out of her account each month to pay down her debt.

Several months later, Jenkins said she became suspicious when the company reached out to her for some paperwork she had already completed. She did a quick search online and discovered a number of complaints about Amerifed DocPrep. Consumers believed they were dealing with the U.S. Department of Education and thought their debt was being paid down, but in reality, neither was true.

Amerifed DocPrep is a private company. That $39 a month fee is for paperwork prep not to pay down the loan. Jenkins said she contacted the company immediately. 

“I said, ‘What am I paying you for?’ and she said, ‘You’re paying us to do monthly documentation,’ and I was like, ‘But Fed Loan Servicing doesn’t need monthly documentation, it’s just yearly,'” said Jenkins.

Amerifed DocPrep does disclose in fine print in its letter and website that it is not affiliated with the government. There’s also a disclaimer that what they offer may be available for free by various government agencies. Something Jenkins said the representative from Amerifed DocPrep left out of the conversation.

“It’s really important that people understand that telemarketers are experts at making the sale,” said Michelle Grajales, an attorney for the Federal Trade Commission.

Grajales says if you need help with your student loans, do your homework.

“Definitely the first step, think about going to the U.S. Department of Education website and spend some time going through. They have very clear information on the different income-based options, repayment options and what you would need to do to qualify for them,” said Grajales.

Amerifed DocPrep did consolidate Jenkins’ loans and lower her monthly payment, but it cost her more than $1,000. However, she could have received the same results for free by contacting the U.S. Department of Education.

“I would just highly recommend that if anybody gets these letters, or even for me if I get another letter that says something of this sort, to call the Department of Education first or call whoever your student loan holder is,” said Jenkins. 

News4 tried repeatedly to speak to someone at Amerifed DocPrep but no one returned our calls.

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