Some student loan borrowers having trouble repaying their loans are getting desperate, causing them to look for help in the wrong places. Federal regulators announced another crackdown this week on firms that charge illegal up-front fees, and ongoing monthly fees, selling debt relief services to these borrowers that are generally available for free. Three cases announced this week by the Federal Trade Commission add to similar cases already announced by other federal regulators, revealing the extent and persistence of the problem.
Complaints against some of these firms can be found online dating back to 2013.
In one case announced by the FTC this week, the operators of Florida firm Consumer Assistance Project reportedly charged an up-front fee of around $250, followed by monthly fees of up to $303 for as long as 36 months.
“The defendants pretend to evaluate these consumers for eligibility, and then tell them they qualify for government student loan forgiveness programs that will reduce their debt by at least 50% to 70%. In reality … consumers are not likely to meet the strict requirements of these loan forgiveness programs,” the FTC said in a news release.
The release also states that some of the social media praise the service was receiving were fake.
An operator at the company said the firm was “not interested” in offering a comment for this article.
In the second case, another Florida firm called Student Aid Center Inc. ran a now-defunct website named studentloanforgiveness.org that promised, “Get Your Student Loans Forgiven Now!” and “$17,500 in Up Front Forgiveness.” Callers were told they were approved for lower monthly payments, and typically charged $199 monthly, or more. Attempts to contact the firm for comment went unreturned.
In a third case, the operators of Good EBusiness, Select Student Loan Help LLC, and Select Document Preparation Inc., which the FTC sued earlier this year, agreed to settle allegations. The firm is now permanently barred from the debt relief business. Attempts to contact Good EBusiness for comment went unreturned
“The FTC is not going to stand on the sidelines when it uncovers evidence of fraudsters targeting students,” Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, said. “Consumers should be wary of any company that claims it can eliminate or greatly reduce debt, especially if they ask for money in advance.”
Back in March, when the Consumer Financial Protection Bureau announced its own student loan debt relief cases, officials from the U.S. Department of Education pleaded with consumers not to seek help from third parties.
“To all the Americans out there working hard to keep up with your student loan payments, please remember: you never have to pay for help,” U.S. Secretary of Education John B. King Jr. said earlier this year.
More on Student Loans:
- Can You Get Your Student Loans Forgiven?
- How to Pay for College Without Building a Mountain of Debt
- Strategies for Paying Off Student Loan Debt