Attorney General Kamala D. Harris  issued a consumer alert to Californians based on an increased number of complaints regarding student loan debt consolidation scams received by the Attorney General’s Public Inquiry Unit.

Often times purporting to offer “student debt management” or “student loan consolidation” plans, private companies are charging borrowers upfront or monthly fees for free federal loan benefits. These 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 and will urge students to use their services in obtaining student loan consolidation or relief. Many times these companies will charge an initial application fee as well as a monthly service fee.

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. Most Direct Consolidation Loans will be eligible for alternative payment plans, including income-driven repayment plans that can lower monthly payments according to income levels. Private education loans are not eligible for the Federal Direct Consolidation Program.

Applying for a Direct Consolidation Loan can be completed online:

Step 1:  Find out more information on the eligibility requirements, benefits, and potential warnings against federal loan consolidation at the Department of Education’s Federal Student Aid website here: https://studentaid.ed.gov/sa/repay-loans/consolidation.

Step 2:  Make a list of all of your federal student loans. You can get a complete list of all of your federal loans here:https://www.nslds.ed.gov/npas/index.htm.

Step 3:  Apply for a Direct Consolidation Loan by completing and submitting the FREE Federal Direct Consolidation Loan Application and Promissory Note found here: https://studentloans.gov/myDirectLoan/consolidationPaper.action.

Step 4:  Choose and apply for a Repayment Plan option. If you are having trouble making your student loan payments, you may want to consider an income-driven repayment plan such as the Income Based Repayment Plan, Pay As You Earn Plan, Income Contingent Repayment Plan, or the Income Sensitive Repayment Plan:https://studentaid.ed.gov/sa/repay-loans/understand/plans. The online Repayment Estimator may be helpful in determining the best repayment plan for your needs:https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action.

If You Are a Current Servicemember with Federal Student Loans:

As a current servicemember you may be eligible for special benefits and repayment options for your federal student loans. More information can be found here: https://studentaid.ed.gov/sa/sites/default/files/military-student-loan-benefits.pdf.

For More Information on Federal Loan Consolidation: 

If you have questions about consolidating your federal student loans, you can contact the Department of Education’s Loan Consolidation Information Call Center at: (800) 557-7392 or visit www.studentloans.gov/.

To File a Complaint About a Possible Student Loan Debt Relief Scam, Contact:

The Attorney General’s Public Inquiry Unit: https://oag.ca.gov/contact/consumer-complaint-against-business-or-company

Consumer Financial Protection Bureau: http://www.consumerfinance.gov/complaint/