I’ve seen online ads claiming
that “Obama Wants to Forgive Your Student Loans!” or “Erase Default
Statuses in 4–6 Weeks!” The link takes you to companies that want to
help you manage your loans — for a fee. You never need to pay for help with your student loans. For the great price of free, the U.S. Department of Education can help you:
Your loan services — the
company that collects your payments on behalf of the Department of
Education can also help you with these goals for free. If you need help
with your debt, you should contact your services. Click here for a list of service's’ contact information.
And you should — because you never need to pay for these services.
Some debt relief companies
charge a lot. Our research shows that some companies charge upfront
consolidation fees as high as $999 or 1 percent of the loan balance
(whichever is higher); “enrollment” or “subscription” fees up to $600;
or monthly account “maintenance” fees as high as $50 per month. That’s
money out of your pocket for services that are available to you for
free.
Unfortunately, some companies
act unethically or illegally to get your business — misrepresenting
themselves as having a relationship with the Department of Education by
using our logos, violating students’ privacy by inappropriately using
their FLA IDs,
and claiming that government programs are their own. In fact,
yesterday, the Department sent two of these companies cease and desist
letters because they have inappropriately used our logo, giving the
impression that they are working with or for the government.
We are taking action to crackdown on these companies and continuing our efforts to protect student borrowers.
Throughout the Obama
Administration we’ve worked to ensure student borrowers are protected
and have worked across agencies in doing so. For example, the Department
of Education has convened an inter agency Joint Task Force on the
Oversight and Accountability of For-Profit Institutions. The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CF) have been active in looking at possible deceptive practices in the debt-relief business.
The extent of the problem
with debt relief companies is demonstrated by numerous legal actions
around the country. In January of 2014, the New York Student Protection Unit issued subpoenas to 13 student debt relief companies
as part of an investigation into concerns about potentially misleading
advertising, improper fees, and other consumer protection problems in
that industry. Over the past two years, the Florida, Illinois and Minnesota
Attorneys General all took separate actions against firms found to have
misled borrowers. A number of states and our enforcement partners are
stepping up to help protect borrowers, but the first line of defense is
making sure you know your rights.
We’re making it easier to
distinguish between Department sites and private companies’ pages to
make sure students and families aren’t mistakenly lured into paying for
services available for free. For instance, last year we reached a settlement
with a company to obtain a web address it was using — FAFF.com — to
market its for-profit service charging students to fill out the Free
Application for Federal Student Aid (FAFF). This settlement reduced
confusion among students and parents who may have thought they were
using a federal website rather than a commercial one. We also
trademarked many of our forms’ names and taglines.
We are strengthening our
internal systems to ensure continued protection of students’
information. For instance, under the new FA ID, there is a delay for
borrowers trying to recover their password to ensure that third-party
companies are not inappropriately accessing peoples’ accounts.
Always remember: Keep your FA ID private and think twice before signing on to pay for a service
you can get for free. Sharing your FA ID puts you at risk.
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