BOSTON – In an effort to help students and families struggling under a mounting student loan debt crisis, Attorney General Maura Healey announced that her office is cracking down on a “cottage industry” of unlawful debt relief companies in Massachusetts. The AG’s Office is also launching a new effort to assist borrowers who are having trouble paying their student loans.
“When people can’t get out from under their debt, they can’t buy homes, start businesses, support families or contribute to our economy,” AG Healey said. “Many companies are taking advantage of this student loan debt crisis by misleading vulnerable borrowers looking to reduce their payments. We are committed to protecting students from these abuses and will ensure that they are able to utilize free programs offered by the federal government to manage their loans.”
According to the AG’s Office, many federal loan servicers often fail to do their jobs to help students enter into affordable payment plans, resulting in debt relief companies offering their services in exchange for exorbitant fees that violated state law. Many of these companies falsely associate themselves with the federal government and fail to make it clear that they are generally filing the same applications for income-based repayment programs that student borrowers could fill out themselves online and for free.
To assist struggling borrowers unable to repay their loans, the AG’s Office is increasing its resources to help students and families with a new Student Loan Assistance Unit. Working with a core of trained attorneys within the Insurance and Financial Services Division, borrowers will be able to access a dedicated hotline and mediation program that will review current student loan and payment situations and help them get out of default or delinquency, work with the student to apply for various income-driven repayment plans offered by the federal government, and advocate for complete discharges of the loans in appropriate circumstances.
In addition to this initiative, the AG’s Office has reached two separate assurances of discontinuance with debt relief companies IrvineWebWorks, Inc. d/b/a Student Loan Processing.US (SLP) and Interactiv Education, LLC, d/b/a Direct Student Aid. SLP has agreed to pay $56,000 and Direct Student Aid will pay $40,000 over allegations of charging illegal upfront fees prior to delivering full and complete services, aggressive marketing practices, and misleading borrowers about their ability to arrange lower monthly payments for their loans. The companies have also agreed to no longer provide or advertise services in Massachusetts.
At least 200 students alleged to be harmed by these deceptive practices are eligible for relief. In these cases, some students were charged more than a thousand dollars simply to have the companies complete these applications.
In addition, advertisements were allegedly designed to give customers the false impression that they were somehow connected to the federal government, or had a special relationships with the U. S. Department of Education, and could help borrowers obtain unusually low monthly payments.
Student borrowers do not need to enroll with companies like these to access the many borrower assistance programs available, such as loan consolidation, income-based repayment plans, and loan forgiveness. The federal government offers these programs to borrowers directly and for free. Companies advertising “student loan debt relief” or “Obama student loan forgiveness” generally cannot negotiate a better deal for students who are experiencing problems in paying their student debts, and none of them have special relationship with the federal government or its loan servicers.
At the Department of Education’s website, borrowers can apply for income-based repayment programs that may help them lower their payments. The federal government even provides options to borrowers who have already defaulted, such as loan rehabilitation.
Student borrowers who are interested in learning more about income-based repayment programs, who have questions about their options, or who would like to know if they are a student eligible for relief as a result of these investigations, should visit the Student Lending Assistance page or call the Attorney General’s Student Loan Assistance Unit Hotline at 1-888-830-6277.
The settlements with Direct Student Aid and SLP were handled by Assistant Attorney General Sarah Trombley and Legal Analyst Brook Kellerman, both of the Attorney General’s Insurance & Financial Services Division.