Companies are taking advantage of students facing staggering student-loan debt by offering false promises to help borrowers relieve their debt, reported The Wall Street Journal.
Some of these companies are outright scams, while others are legal but shady.
With a national student-loan debt total of $1.5 trillion, borrowers are in a precarious position that makes them easy targets.
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Student borrowers are feeling the weight of student-loan debt.
The national total student-loan debt is over $1.5 trillion and the average student loan debt per graduating student in 2018 who took out loans is $29,800, according to Student Loan Hero.
But now, borrowers have another pressure to weigh when it comes to paying off their debt: relief scams.
Companies that offer the false promise of helping borrowers reduce or forgive debt are cropping up, Jean Eaglesham, Michael Tobin, and Coulter Jones reported for The Wall Street Journal.
Regulators told the trio that while some companies are scams or make illegal promises, others operate legally, but charge for services that could elsewhere be found for free. Many of these firms operate under several names, they wrote.
The Journal reporters found that borrowers featured on the website of one particular firm — Financial Preparation Services — appear in other variations on an additional 25 websites of “purportedly different companies offering student-loan debt-relief in the last four years.” They reviewed a 2018 client agreement from Financial Preparation Services that charged $1,195 for document preparation and $40 a month for nearly 20 years — amounting to $10,555.
That’s a large sum that could otherwise go toward paying off debt instead.
The Federal Trade Commission has filed nine civil cases against alleged student-loan debt-relief scams in the past two years, including allegations of illegally charging upfront fees for debt relief, pretending …read more
Source:: Business Insider