WARNING: Student Loan scams hitting SWFL
Rip-offs, scammers, criminals. That’s what some state and federal lawmakers are saying of companies offering you a chance to wipe those student loan debts clean. Meanwhile, people are so desperate for help, it doesn’t look like those debt relief companies are going anywhere soon.
A dream of becoming a nurse, left Clewiston mom Courtney Dowd living in a nightmare.
“Instead of being sentenced to death, I’m being sentenced to debt. With having to pay back all my daily life bills, sometimes there is not money there to pay for my loans that I have taken out,” said Dowd.
She’s not alone. Lehigh Acres mom Rachyle Scott feels her pain.
“It was a whirlwind Next thing I know, I am 30-grand in debt for $15 an hour,” said Scott.
These are the faces of student loan debt. Moms, like Courtney and Rachyle, who are trying to live the American Dream and provide better lives for their kids, but can’t.
“I want to to do more, but I can’t because I can’t afford to,” said Scott.
That’s where student debt relief services swoop in, with promises of loan forgiveness, and low monthly payments. They use social media, TV, and top Google searches to reel in their prey.
The Internet is where Bonita Springs man Andrew Weyl found College Education Services, known as CES. Back in 2007, Weyl had a tough choice to make.
“I had to make a choice between making my house payments, or student loan payments. House payments sort of won out,” said Weyl.
Fast forward years later, Weyl wanted to buy a new home, and needed some help getting a garnishment lifted, so he turned to CES.
“They told me they could have my student loans out of the garnishment, consolidated and ready to go within actually a few weeks,” said Weyl.
He gave the company $1,600 upfront, and the power of attorney, which they asked for. Weyl says he thought the quick fix was worth it, but eight months later, nothing had been solved.
After all of that, Weyl ended up with higher monthly payments.
“Basically what happened was, my company had taken the information, then presented to an administrative judge and said this person claims he can’t make any payments,” said Weyl.
Weyl contacted the Florida Attorney General and filed a complaint. Eleven other complaints have been filed against this company.
“After that, none of my emails or phone calls would be accepted,” said Weyl. “I was actually worse off. People are being taken advantage of, because it sounds like a good alternative.”
The Florida Attorney General sued CES for telemarketing fraud. The state says they never admitted or denied the allegations, but CES shut down shortly after. CES then paid $50,000 to the state.
Other top officials across the country, are taking notice too. Both Illinois and Minnesota have filed lawsuits against student loan debt settlement companies, for fraud, illegal upfront fees, and deception. Two of those companies are in Florida.
“It’s become a predatory market,” said Margaret Joffe, a certified student loan counselor.
Joffe warns against debt relief companies, that ask for high fees upfront, or make fast guarantees.
“There’s no quick fix to a student loan problem,” said Joffe.
She says watch out for companies that promise to reduce or eliminate student loan payments. Only the US Department can, and it’s free.
Joffe calls the Federal Student Aid website the best resource for borrowers.
“Pretty much can answer any question someone has,” said Joffe.
She recommends nonprofits, or student loan counselors if you need help, who charge a small fee, but you keep the power.
“A neutral third party is always good.”
But Joffe says, always do your homework.
“Shop. Make sure who you are looking at, what their credentials are, what successes they had, complaints.
The Florida Attorney General also offered tips to avoid student loan scams:
- Be wary of firms that use high-pressure tactics, such as pushing a consumer sign a contract on the spot;
- Avoid companies that require up-front fees before receiving any service. Instead, seek free assistance available through student loan servicers; and
- Be cautious of companies that promise immediate loan forgiveness or cancellation. Payment levels for federal student loans are set by law and, for most borrowers, loan forgiveness is only available through programs that require many years of qualifying payments.
The State of Illinois sued Interactiv Education, out of Delray Beach, for fraud.
Their website says it is currently down for service, but says to come back soon.
Student Aid Center, out of Doral, uses Instagram to attract borrowers.
The Minnesota Attorney General is suing them for charging illegal upfront fees.
The Florida Attorney General had 14 complaints against this company. The company told Forbes magazine, “they are definitely not a scam.”
Here’s the list of companies, sued by the State of Illinois:
- First American Tax Defense, out of Chicago (now out of service).Consumer Financial Resources, out of Wylie, Texas.
- Federal Student Loan Alliance, out of Tustin, CA (now out of service).
- Student Consulting Group, Inc, out of Atlanta Georgia.
- Nationwide Student LLC, out of Chicago. (now out of service).
- Broadsword Student Advantage, out of Carrollton, Texas.