I used to work in the collection business. Outside of some special circumstances as described in the call, "debt forgiveness" is a complete hoax. There is no such thing. Why would a lender do this ever? They have a binding legal contract that says you owe them money and in most cases also defines the interest rate and penalty structure for late payments. There is zero incentive for anyone to ever "forgive" a loan ever in the private sector. The government backed loans are a whole different matter because the government can always get money. A private business can't.
So when a legitimate company (like AES appears to be) offers deals to assist you, what they're usually doing is trading money today for money tomorrow. They will not often save you money. They will improve your cash flow in the short term by lowering your monthly payment but you'll end up paying more long term because your principle owed does not change and you'll just be paying and accruing interest for longer time on more money. Obviously if they really lower the interest rate it can save you money but that happens pretty rarely.
As is most often is though, the devil is in the details. They *MIGHT* be able to lower the interest rate. It depends on how the loan is created. Is it a purely private student loan made by a private company or is it subsidized by the government? Depending on who created it, the options to change it later are different. And in some cases interest is deferred while you're in school and not making payment and in some cases interest is accumulated while you're in school and not making payments. You have to know what your loan says and what you are getting into.
The collection and loan industry in general works something like this. Lets' say you take out a loan for $1000 at 10% and you pay it back in a year. So at the end of the year, you've paid back 1100 and the lender made $100 on you. If you don't pay it back, he has a couple of options. He can work with you to lower payments in exchange for longer time. He can sue you and win a judgment (that he still has to collect on, it's not an automatic check in his pocket). Or he can write it off as a bad debt in which case any loss he sustained becomes part of his business expense to soften the blow on him a little. In most cases, he will eventually sell the loan itself to a 3rd party at some fraction of the face value so he gets some money back but not all but more than nothing. Loans can be sold and resold many times. The buyer may choose to add fees on top of the original loan and try to collect it or they may try to collect the original amount and they profit on the difference (let's say they bought the $1000 loan for $500 for example).
So how do these scams work? Most often if you really dig into it you'll find what they recommend is that you stop making payments entirely. Just stop paying. The original loan holder will attempt to collect and most likely fail because you're a slacker and have decided you're not going to be honorable and pay your debt. The debt forgiveness company is counting on the fact that eventually the original loan holder will write off the debt and sell it on the secondary market and you (or they on your behalf) will be able to negotiate a lower settlement with the new loan holder based on the fact that that whomever owns it now bought it at a discount. in the meantime, your credit rating is destroyed but they often don't tell you that's going to happen. It's also a little risky for you because being unable to pay due to financial circumstances is one thing. If you lose your job and can't pay, then you can't pay. If you're still working and just decide not to pay and you get sued and they win, they can (not always will, but CAN) garnish your wages. It's also borderline fraud. So if they can prove you just didn't pay to try to get out of the loan, I can see a way where you might wind up facing criminal fraud charges. Maybe(I'm not a lawyer).
This is all statistically driven. Buying old, dead loans like this is very risky for the collectors. And they are statistically aware of what their expected collection rates are etc. If they're bad at making these projections, they're not in business very long. Often these are old and mostly un-collectable debts, so if they buy a $1000 debt for $250 and you offer them $400 one time lump sum to settle it, then they'll usually take that because it's an instant win for them and they don't have additional costs in salaries and commissions and whatnot that they pay their employees (the bill collectors). And from your perspective, you just got a 60% discount on your original debt so you feel like you win too. This is true even if they tack crazy charges on top and their first document to you claims you owe them $3700 based on penalties, fees, years of accumulated unpaid interest, etc. In real terms, they paid what they paid for the loan and the rest is gravy that they use to create a big stick to scare people to death with and lock them into 10 years of $30 a month payments on a $250 investment. That's not really illegal, perhaps unethical, but it's not illegal.
It all depends on your original loan as to what both your and the lendors options are with regards to modifying the loan terms later. But in the end, usually "debt forgiveness" is just a scam.
