Finally, a clear picture of how student-debt-relief companies take advantage of loan borrowers.
sing deceptive ad slogans like “Obama’s New Forgiveness Program” and “We Work for the Department of Education,” private companies are charging student-loan borrowers for services that falsely claim to provide debt relief, forgiveness, and consolidation. The pervasiveness of these so-called debt-relief companies is a growing problem for millions of borrowers—a problem that gets far too little attention.
In July 2016, Student Debt Crisis and NerdWallet conducted a survey of customers of privately operated student-debt-relief companies in an attempt to shed light on their abusive profiteering. Prior to this survey, advocates, experts, and legislators remained largely in the dark about their predatory practices.
Survey results from 6,363 respondents discovered that the average borrower paid $613 for private debt-relief services that are, in fact, offered for free by student-loan servicers and the Department of Education. Sixty-five percent said their financial situation was not improved. Those who paid for student loan debt relief, forgiveness, or consolidation services reported high prices and abysmal satisfaction, confirming that these companies are generating massive revenue for assisting borrowers with something they can easily do themselves through free programs.
It doesn’t stop there. One-in-four borrowers are contacted directly by these companies on a weekly basis. Such frequency highlights…