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FTC Sues Student Loan Debt Relief Companies

Wednesday, November 20, 2019

FTC Sues Student Loan Debt Relief Companies

Submitted by Ari Lazarus, Consumer Education Specialist, FTC
Student loan debt can be a heavy load to carry. That's why there are a lot of companies claiming to help permanently reduce and wipe out federal student loan debt. But some of these companies don't deliver what they promise - if you sign up, they take your money and do nothing to help you.

According to an FTC lawsuit, Arete Financial Group and related companies did just that. After requiring an illegal upfront fee for their services, Arete usually contacted a borrower's loan servicer and placed the borrower's loans into temporary forbearance or deferment status - often without the borrower's permission or knowledge. Meanwhile, borrowers were sending in monthly payments that Arete said would go towards the borrowers' loans - but the FTC is alleging the money really just went into Arete's pockets.

So how did Arete and its partners get away with it? According to the FTC, borrowers thought Arete was legit - especially because they claimed to work directly with loan servicers and the Department of Education. Instead, Arete changed borrowers' Federal Student Aid (FSA) login ID, password, and contact information with their loan servicer. This cut off contact between borrowers and their loan servicers, so borrowers wouldn't find out the truth until it was too late.

The FTC alleges that Arete's lies led to very real harm to borrowers. Some people's loans are now delinquent, and their income tax refunds are being garnished. And, all those monthly payments to Arete that never actually went towards borrowers' loans? That money is gone.
Remember: you don't have to pay for help with your student loans. There's nothing a company can do for you that you can't do yourself for free. If you're a federal borrower, start with StudentAid.gov/repay.  https://studentaid.ed.gov/sa/repay-loans

If you're a private borrower, start by talking with your loan servicer.  
Spotted a student loan relief scam? Let us know about it. And for more resources on student loans, check out FTC.gov/StudentLoans.  https://www.consumer.ftc.gov/articles/1028-student-loans
Center for Finance & Education Update:
Thursday, November 7th, NHFCU hosted a class in Concord with guest, Tori Berube, from NH Higher Education Assistance Foundation (NHHEAF). Class was full, and participants gained helpful knowledge about the student loan payback process.  

One of NHFCU's employees was in attendance for the class and shares her experience with student loan debt:  

"Student loans ... it's the only time I cringe with regard to any kind of loan. I have never been able to wrap my head around how we, as a society, have come to accept applying for these loans and have little knowledge about how they can jeopardize our financial futures. 
To put this into perspective, I can't just walk into a lending institution and apply for a mortgage above $100,000, let alone above $50,000, and expect to be approved for it. Why?  Because I simply don't have the credit history, or the financial backing to support such a large loan. However, I CAN walk into any student loan servicer's office and apply for a loan above $100,000, and, very likely I'll be approved for it. Knowing this, it comes as no surprise to me that our nation is facing a "student loan crisis" totaling more than $1.5 trillion.
In most cases, the loan servicer's goal is to have students sign on the dotted line.  They put the document in front of you, and the terms and conditions of the loan are printed in black and white. However, many students do not understand the importance of reading the information. The loan servicers don't ask students to read the document. That's why we need to take responsibility for reading this information.  It's critical to your financial future. Why?  Because within six months of graduating from college, it's time to start repaying that loan.  
I am one of those students who got left "in the dark." I have seen too many of my peers in the same situation after graduation.  That six-month grace period, that most of us probably didn't read about, comes to an end.  That's why I attended the Student Loan Repayment Strategies class that was held at our Center for Finance and Education on November 12th. Tori (NHHEAF) provided me with information I wish I'd been provided with by the loan servicer the day I signed for my student loans."  
Once you have student loan debt, you will find you have to pay it back, one way or another.  There's just no easy out."

NHHEAF and NHFCU help you look at ways to ease your stress when you write that monthly check.  At NHFCU's Center for Finance and Education, we work with people who are trying to make ends meet while mired in burdensome monthly payments for their student loans.  

Though the November 7, 2019 class was full - let us know if you would like us to schedule another class at our Centers for Finance and Education. Call us at 224-7731,ext. 330, to provide your contact information and let us know the best days and times for us to host this class again.  Our Centers for Finance & Education exist for your benefit - so just tell us what you want!

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