You’ve undoubtedly heard all about the student debt crisis in the United States as it’s all over the news. What you might not have heard about however is the fact that there’s a growing student loan repayment fraud problem as well, with companies regularly emerging that offer student loan repayment assistance at high fees, assistance that, in the end, does little or nothing to actually help get those student loans get repaid.
Two of the worst of these “debt relief” companies are First American Tax Defense LLC and Broadsword Student Advantage LLC, both of which are being sued by the Attorney General of Illinois, Lisa Madigan. Both companies charge upwards of $1200 to consumers looking to either reduce or completely eliminate their student loan debt. In return for these ridiculously high (and upfront) fees however, both companies have been offering their customers information that they easily could have gotten for free on their own with a little bit of Internet research, or free from the federal government.
The fact is, the FTC is very busy fighting companies that offer questionable debt relief services and, with the student debt crisis in full swing, student debt relief companies have been popping up much more frequently. The problem of fraud among these new companies began to attract attention in June 2013 when a report about some of them was released by the National Consumer Law Center, who pointed out several examples of the immoral, and sometimes illegal, practices that these companies were engaging in. Some of these behaviors included claims that they were affiliated with the federal government, and providing either inaccurate or completely false information to their customers.
An advisory from the Consumer Financial Protection Bureau was also issued in July of 2013, stating that many of these services offered by these companies are not only available free from the federal government but actually federal government services that are falsely being claimed as their own. Claims by many of these companies that they are legally able to negotiate away a student’s federal loan debt were pointed out by the advisory as being patently false.
Educate yourself about student loan repayment
Remember the old saying “Knowledge is Power”? One of the first things that you should do is click on the National Student Loan Data System online and find out the exact details and status of any student loans that you owe. Knowing this information, and knowing the rules and regulations for repaying federal student loans, will help you to make educated decisions about what to do next.
When it comes to paying off your student debts, knowing exactly what can and can’t be done by these companies will help you to avoid the worst of them as well as avoid losing your hard earned money.