| Settlements are the option considered by students | | | | settlement agencies work hand-in-glove with lending |
| who find it very difficult to repay the loans taken by | | | | companies, though on the face it may seem that |
| them for their education. Settlements involve an | | | | they exist for the borrowers' benefit. |
| intermediate agency that negotiates with the lender | | | | The option of settlement must be considered by the |
| to provide the student borrower an ease in | | | | student only in the most extreme of cases. In |
| repayment. | | | | actuality, a settlement makes the student pay more |
| Settlement agencies charge some fees upfront when | | | | than bargained for. Since there are no payments to |
| one enrolls for their settlement program. Once a | | | | the lender for several years, the loan becomes a |
| student is enrolled, the settlement agency collects | | | | default, incurring late charges and even interest upon |
| some money every month from the student and | | | | interest. When the settlement company finally wishes |
| accumulates it into a temporary escrow account. This | | | | to settle the loan, the loan has to be revived and this |
| money is accumulated until it is deemed suitable | | | | attracts more charges. These charges are usually |
| enough by the settlement agency to negotiate with | | | | hidden from the borrower. Also, settlement |
| the lender. The negotiations result in the student | | | | companies charge monthly maintenance fees from |
| having to pay a reduced amount, even on the | | | | the student. Thus, a student must very carefully |
| principal, and thus settle the loan. A settlement may, | | | | consider the wisdom of settlement before |
| on the face of it, save the student even up to 50% | | | | approaching the agency. It must also be considered if |
| of the loan amount. | | | | filing for bankruptcy is a better option. |
| Settlement agencies are more an advantage to the | | | | The facility of settlement loans is provided for |
| lenders than to the borrowers. They collect money | | | | economically unstable students who cannot afford to |
| from the borrower, and thus the lender is assured | | | | pay the huge monthly interests. However, there are |
| that they will be paid their due amount. If the | | | | several others who avail of this facility, attracted by |
| student were to file for bankruptcy, then the lender | | | | the lucre of getting something for nothing. |
| would not have got anything of the due. Thus, | | | | |