FTC cracks down on scammers targeting borrowers with phony student loan debt relief schemes.
Do you have a lot of student debt? Wish it would disappear? You’re not alone. Scammers know that people are struggling with debt. They’re targeting borrowers with phony student loan debt relief schemes that can make things worse.
Today the FTC and the State of Florida announced lawsuits against two student loan debt relief schemes — Consumer Assistance Project and Student Aid Center. The FTC also announced a settlement in a case we wrote about earlier this year.
According to the FTC, Consumer Assistance Project and Student Aid Center promised to get people’s loans forgiven or significantly reduced. Consumer Assistance targeted people online and over the phone, claiming it would get relief through government programs or by disputing loans. Student Aid Center used radio ads, text blasts, and featured ads in search results to promote “Obama Loan Forgiveness.”
But people who paid the companies didn’t get their loans forgiven or reduced. At best, the companies got people’s loans put into deferment or forbearance, where loan payments are postponed but the interest owed on them can keep growing. Student Aid Center made some situations worse by telling people to stop contacting their lenders and pay the company instead. People often ended up paying thousands, but didn’t get the promised relief.
Student loan forgiveness programs are available in very limited circumstances. You can apply for debt relief yourself; you don’t need to pay a company. The FTC has new education materials to help borrowers:
- Student Loan Debt Relief explains how to spot a debt relief scheme, and what people struggling with student loans can do themselves.
- Maria and Rafael Learn the Signs of a Debt Relief Scam tells the story of a couple trying to repay debt they accumulated for their daughter’s college education. It’s the latest in a series of graphic novels to raise awareness about scams targeting Latino communities.
- This list shows every company and individual ever banned from providing debt relief and mortgage assistance relief services by an FTC order.