Consumer Financial Protection Bureau Shuts Down Fraudulent Student Debt Relief Firm

National student loan debt is currently at a staggering $1.3 trillion. As this figure continues to grow, so does the percentage of accounts that are delinquent and in default as more and more borrowers suffer under this overwhelming debt.

In an effort to provide relief to borrowers, the government has launched several federal loan assistance programs. However, in conjunction with the launching of these relief programs, fraudulent student debt relief companies have surfaced where borrowers are misled into paying fees for programs they can actually enroll in for free.

According to the New York Times, in early April the Consumer Financial Protection Bureau, “acted to halt the activities of one such company, Student Aid Institute, saying that the company, based in San Diego, illegally tricked borrowers into paying fees for federal benefits.” The Bureau has been taking a series of such actions against debt relief firms for the past two years.

According to the Bureau, if you were a customer of Student Aid Institute you may need to take steps to maintain enrollment in certain federal loan repayment plans. It is recommended that you call your loan servicer right away to make sure the plan you are enrolled in is the best for you. If you don’t know who your loan servicer is, you can look it up on the Education Department’s website or call the department at 1-800-4-FEDAID.

We hope you are finding our consumer alerts useful. And, as always, if you know someone who is struggling with overdue debts, please have them call us for a bankruptcy consultation at 212-315-3755.