CFPB Takes Action to End Student “Debt Relief” Scams

College Education Services and Student Loan Processing are charged with illegal advance fees.

Accused of student loan fraud by falsely promised lower payments; falsely claimed quick relief from default or garnishment.

STUDENT LOAN FRAUD – on December 15, 2014 the Consumer Financial Protection Bureau (CFPB) took action to put an end to two student “debt relief” scams that illegally tricked borrowers into paying upfront fees for federal loan benefits.   The CFPB, in a joint filing with Florida’s Attorney General, shut down student debt relief company College Education Services and separately filed a lawsuit against Student Loan Processing.US for illegally marketing student debt relief services.

The behind the scenes reason for this increased scrutiny is that the bankruptcy trustees and their attorneys are hungry. Bankruptcies are down, but their firm and life style were built on earning a very healthy income. Now they are desperate to keep up that same level of income.

“Student loans are already a significant debt for many Americans. College Education Services and Student Loan Processing.US added to that hardship by taking advantage of troubled borrowers and failing to describe their services honestly,” said CFPB Director Richard Cordray.

College Education Services and Student Loan Processing is charged with illegal advance fees; falsely promised lower payments; falsely claimed quick relief from default or garnishment.

Student Loan Processing.US is charged with falsely representing an affiliation with the U.S. Department of Education; charging illegal advance fees; deceiving borrowers about the costs and terms of its services.

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Musings from Diane:

This country’s future is based on educating our youth.  We promote advanced education as “the” way to success.  Unfortunately schooling is very expensive.  Student loans were created in order to offer everyone access to college.  Access to this “free money” created borrowers who do not realize the consequences of borrowing against their future.  But, the insidious result is that access to these funds puts the schools in the primary business of making money, without regard to the ability of the student to pay the debt.  More importantly the school makes more money if they raise tuition and reduce teacher’s salary.  That reduced salary insures that good teachers will quit leaving mediocre teachers to teach our students.  This keeps the school’s overhead down, profits up and the quality of education at rock bottom.

Add into the mix these greedy individuals who sell services to the student borrowers with no ability or intent to follow through.  If we fail to punish those who prey on naive borrowers then this vulturous practice will continue.  This move on the part of CPFB is a good start, but there is a long way to go.