I'm not quite sure how to best get the word out to protect consumers from student loan assistance scams. It's a topic I've been talking about for some time now and it's going to be a huge scam pit for many people. Some people have already been scammed by companies charging tens of thousands of dollars for student loan assistance help they could have received for free.
I understand why people fall for these schemes. They see a television commercial or hear a radio ad that promises easy or non-profit help to deal with student loans and that triggers a call. But what the student loan assistance companies are not doing is telling people the help for their federal loans is available for absolutely free from the Department of Education.
I've seen fees as high as $20,000 and $49 a month for twenty years being charged to consumers for consolidation, forgiveness, or payment reduction programs. A nominal fee for providing the information seems reasonable if people are aware they can get the help for free but want to pay for it anyway. But that's not what is happening.
Debtors are being often led to believe the student loan assistance company has some "secret sauce" or special relationship with the Department of Education and not being told the help is really available for free. Rather than helping consumers out, many companies are putting the person deeper in debt with new expensive fees and charges on top of their student loans.
Instead, people are being sold some student loan magic by salespeople and telemarketers who are charging advance fees for these services. And these fees may even be illegal under the Telemarketing Sales Rules by the Federal Trade Commission.
Advertising, promises, contracts and results have all raised concerns about truthful disclosures and alleged deception of student loan assistance marketers.
Instead of paying large sums for student loan help people can get free help by reading The Ultimate Guide to Dealing With Student Loans You Can't Afford.
Today the New York Attorney General has taken a first step in investing some of the student loan assistance companies. The New York newly established Student Protection Unit took its first official action by issuing subpoenas to 13 student debt relief companies as part of an investigation into concerns about potentially misleading advertising, improper fees, and other consumer protection problems in that industry.
In particular, the Department of Financial Services' (DFS) Student Protection Unit is probing concerns that this industry is charging high, improper fees without adequate notice for enrolling students in debt relief programs that are available for free through the federal government.
Benjamin M. Lawsky, Superintendent of Financial Services, said: "Socking students with high fees for a service that is already available for free through the federal government is an immediate red flag. The Cuomo Administration's new Student Protection Unit will vigorously investigate this industry and any other potential violations of students' consumer protection rights."Concerns have arisen about whether these private companies are charging improper, high upfront fees for simply funneling students into free government programs. A recent National Consumer Law Center report detailed these and other troubling practices within this industry. Some companies also offer debt relief services in connection with private student loans. These private debt relief companies may charge inappropriate fees and may misrepresent their ability to obtain the results that they represent they can achieve. DFS's Student Protection Unit today issued subpoenas to thirteen student debt relief companies for a range of documents, including advertising materials, contracts, consumer disclosures, and fee schedules. The companies to which DFS issued subpoenas include:
- AlphaOne Student LLC
- Brelvis Consulting, LLC d/b/a The Student Loan Help Center
- Consumer Protection Counsel, P.A.
- Debt Be Gone, LLC
- Default Student Loan Assistance, LLC
- Interactiv Education, LLC d/b/a Direct Student Aid, Inc.
- Omega Capital Advisory LLC d/b/a Federal Student Aid Relief
- Student Consulting Group, Inc.
- Student Loan Relief Center, Inc.
- Student Loan Service
- US Student Loan Helpers, Inc.
- US Student Loan Services, Inc.
- Xtreme Products LLC d/b/a USA Student Loans
Any New Yorker who would like to file a complaint with the Cuomo Administration's Student Protection Unit about a student debt relief company or other potential abuses can contact the Department of Financial Services Consumer Hotline at (212) 480-6400 or (800) 342-3736 for assistance. The Cuomo Administration's Student Protection Unit has also issued a consumer alert with information on student debt relief companies.
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