Department of Education Warns Students of Debt Relief Scams
United States Secretary of Education Arne Duncan spoke out on YouTube warning student borrowers to be wary of marketers selling services sounding too good to be true.
During a CNN interview on Thursday Duncan said he is truly inspired when he steps foot on the dozens of community college campuses he has visited around the country. He deems students of these community colleges as inspirational due to their efforts to gain the skills and trades needed to become part of a middle class America. He claims to fully support the partnerships between these educational establishments and local industry as many are becoming “regional economic engines,” driving economic activity by creating jobs within those communities.
On a YouTube video Duncan addresses borrowers to be wary of debt-relief companies who are targeting borrowers within these community colleges with mailings or social media ads often featuring a brand making them appear to be affiliated with the Department of Education. These lending companies claim to provide borrowers with debt relief options, offering consolidation and lower monthly payments at an exorbitant fee. The Department of Education wants student borrowers to be aware they offer the same services for free.
“Please remember if they’re saying they can cancel your loans or reduce your loans, but only for a cost, that is never the case. You can always work directly with us and that should always be free,” said Duncan.
Rohit Chopra, former student financial services regulator of the Consumer Financial Protection Bureau, has mentioned these new repayment companies are luring in desperate and vulnerable borrowers as they only fine print information concerning the governments free programs for manageable payment options.
Multiple attorneys general and the Consumer Financial Protection Bureau have filed lawsuits against a number of these companies with accusations of “deceptive marketing” and “charging illegal fees.”