(Reprint from Federal Trade Commission, May 17, 2021) The operators of a student loan debt relief scheme are banned from providing debt relief services and have agreed to settle Federal Trade Commission charges that they collected illegal upfront fees and falsely promised to lower or even eliminate consumers’ loan payments or balances.
In its 2019 complaint the FTC alleged that Student Advocates Team and other defendants charged illegal upfront fees that they led consumers to believe went towards consumers’ student loans, and falsely promised that their services would permanently lower or even eliminate consumers’ loan payments or balances. The defendants also signed customers up for high-interest loans to pay the fees without making required disclosures.
The orders ban the settling defendants from providing debt relief services, prohibits them from violating the Telemarketing Sales Rule, and includes a monetary judgment against certain defendants of more than $24.5 million, which is partially suspended due to an inability to pay. The defendants will be required to pay $11,500, which will be used for consumer redress. The defendants are also prohibited from collecting any further payments from the consumers who purchased their debt relief services.
The Commission vote approving the stipulated final orders was 4-0. The FTC filed the proposed order in the U.S. District Court for the Central District of California.
I am a huge supporter of education, but the typical borrower is usually not prepared to predict if, and when, they can pay back a loan. Instead, some borrowers view it as “free” money and assume that they will find a way to pay it back “sometime”. Typically, they do not finish their education and end up in a job that barely supports them, and their family. Certainly they cannot afford to buy a home, save for unexpected expenses or pay for their own child’s education It becomes a terrible cycle of borrowing, failing to pay, having their wages garnished, which now means they definitely cannot afford to pay rent. This becomes a cycle of life for them, their children, and their grand children.
There are alternatives – school grants, scholarships, an extra job, or help from family. Never be too proud to ask family for help, if what you want to do it get a good education. But, never see school loans as free money – they come with disastrous price tags.
Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.
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