While today’s students certainly see the value loans have when it comes to getting their degree, many students don’t realize just how valuable their loans are to other lenders in the market. But lenders can reap a huge profit on a student loan if they can get the student to consolidate their loans with them. It’s why shady marketing tactics exist; it’s why many lenders are so eager to shower students with a myriad of letters and sometimes even offer free lunches.

For example, if a student has $100,000 in T.H.E. Stafford loan debt that they will repay over a 25-year term, the $100,000 loan will generate about $44,000 of profit. At T.H.E., this amount is going to be given back to the student in the form of our T.H.E. Bonus. But if a telemarketer can convince a student to fill out a consolidation application for a loan with on-time benefits (despite the fact that consolidation loans are less valuable because of the additional fees levied on consolidation loans by the Department of Education), the telemarketing firm can sell that loan for $7,000 or more in the student loan secondary market. The student, unfortunately, probably won’t see any of that cash: as you may know, only 5% to 15% of other lenders’ borrowers ever receive any bonus (more than 95% of T.H.E. borrowers receive our T.H.E. Bonus).

Students need to be smart about their loans and schools need to help students realize the value their loans have. They also need to know that consolidation isn’t always the right solution. Don’t let your students make a $44,000 mistake, even if they get a free pizza lunch one day.