The Federal Trade Commission (FTC) recently reached settlements with two companies it accused of offering unlawful student loan debt relief services. These companies conducted business under several names, including StuDebt, Student Debt Relief Group, SDRG, Student Loan Relief Counselors, SLRC, and Capital Advocates Group. Contact me if you have student loans and paid money to any of these companies. You might able to recover some of what you paid.

The defendants named in the FTC’s complaint marketed their student loan debt relief scam through an aggressive telemarketing campaign that included calls to consumers who had listed their telephone numbers on the national Do Not Call Registry. The defendants used a number of techniques to mislead student loan borrowers into believing the defendants worked with the US Department of Education (DOE) and could help them enroll in programs that would lower their monthly loan payments. For example, the defendants’ telemarketers told borrowers that they “work on behalf of the government,” that they were a DOE “partner” or that “they represent [DOE} in assisting students.” To compound the fraud and further mislead consumers, the defendants used email addresses that ended in “.us.”

According to the FTC, The defendants told some consumers they were eligible or “preapproved” for a government student loan “forgiveness” program that would lower their monthly loan payments by hundreds of dollars. They also falsely promised consumers that their monthly payments would remain at the reduced amount for up to 20 years, at which time the remaining balance would be forgiven.

In exchange for these fraudulent promises, the defendants required consumers to pay  advance fees that exceeded $1,000 in some cases. That’s illegal. The FTC’s Telemarketing Sales Rule prohibits telemarketers from collecting up-front fees for debt relief services.

The defendants also told borrowers they would be servicing their student loans in the future and required them to pay recurring monthly fees for that service. They led borrowers to believe these monthly fees would be applied to their student loans. In fact, the defendants kept the fees in many cases. To cover their tracks, they instructed borrowers not to communicate with their real loan servicers.

If you have federal student loans, you may be eligible for programs that can reduce your monthly payments depending on your income. There are other programs that forgive your remaining loan balance after you’ve made 120 qualifying payments while working full-time for a qualifying public service employer. You can apply for these programs yourself and the DOE does not charge you to apply. Under no circumstances should you pay fees to a company that offers debt relief services unless and until it has:                1)  negotiated a settlement or modification of the terms of your loan; 2) you have made at least one payment in connection with the settlement; and 3) the fees are reasonable in proportion to the terms of the settlement.

Federal debt relief programs have strict eligibility requirements. Unfortunately, many people who have federal student loans don’t qualify. Anyone who guarantees that you qualify for a federal debt relief program, or asks you to pay advance fees for student loan debt relief, is probably running a scam.

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