A graduate trying to remove some saved money from her piggy bank. Isolated on white.
A graduate trying to remove some saved money from her piggy bank.
File Photo

If you hold federal student debt and are struggling to make your payments, you can contact the federal government for advice on your options. It’s free.

Or, you can pay a bunch of money to talk to an expert who might tell you much the same, or who might even fail to deliver on those options.

That’s one element of separate complaints against debt settlement companies, which The New York Times reports will be brought by Illinois against two debt settlement companies targeting student borrowers. According to the Times, Illinois is the first state to bring such a suit.

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The state alleges Broadsword Student Advantage and First American Tax Defense, the companies named in the suits, were unable to deliver on relief they promised, according to the Times. They also allegedly claimed to be affiliated with government relief programs, and allegedly misled students about their fees.

Student borrowers have options with government-funded student loans, which loan servicers will talk borrowers through. Examples include the Income-Based Repayment model, which caps monthly payments at a percentage of their take-home pay. And an executive order from President Barack Obama issued earlier this year is expected to expand the Pay-as-You-Earn repayment plan to more borrowers in 2015. That plan caps payments at a lower percentage than the existing Income-Based Repayment plan.

Graduates working in public service positions, such as teachers or nonprofit employees, can also apply to get their debt forgiven after 10 years of loan payments.