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Student Loan Lament
Debt Agencies Defraud Broke College Grads

For many Americans struggling to repay their college loans, taking steps to alleviate the burden only makes things worse. Debt settlement agencies often prey on indebted college graduates, promising to reduce their debt load but ultimately sending their victims further in debt. The NYT reports that borrowers have filed “hundreds of thousands of complaints” against these companies:

In her suit against the companies and their operators, Lisa Madigan, the Illinois attorney general, contends that the businesses lured borrowers into paying hundreds of dollars upfront, and in the case of Broadsword, $49.99 a month after that, according to copies of the lawsuits reviewed by The New York Times. The companies often misled customers about those fees, according to the suits, and in some instances feigned affiliation with federal relief programs.

In a particularly cruel twist, Ms. Madigan said, the companies sometimes charged customers for debt assistance that they could have received free from the Education Department. […]

It’s bad enough that students are pushed into a unaffordable higher ed system that leaves many woefully indebted and unable to invest in homes, cars, and family life as soon as they’d like. Now, as the higher ed bubble continues to expand, a college degree can all too easily provide a path to prosperity not for students, but for opportunistic scammers.

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  • Andrew Allison

    I assume that among the opportunistic scammers you include the institutions of higher education who sucked the students into the debt in the first place.

    • Pete

      That’s right. The scammers are small potatoes compared to the university establishment which is the root of the problem.

  • Gerald

    I am sorry that college debtors are being scammed by others. However, what does it say about the quality of college education that graduates are so ignorant of basic principles of personal finance?

    • Pete

      It shows that many should never have been let into college in the first place, let alone graduate

      Reports show that in four years — or how ever long it take to graduate these day — many of the kiddies are shocked to realize what it means to actually have to pay back their student loan debt.

      And to think that society allows them to vote. Lord have mercy.

    • Thirdsyphon

      The kids who sign up for these loans are high school graduates, not college graduates, at the time they make these decisions. But I’m sure that nobody here ever had a lapse of judgment about anything important when they were teenagers. . . certainly not about something as simple as financial planning for the next 20-odd years of their lives.

      • Breif2

        I assume you meant to reply to Pete, as Gerald is clearly referring to college graduates. As was I, in this post which considers it necessary to advise college graduates that “repayment needs to begin with an accounting of every individual loan. Start with whatever is in your files. Then check to see whether you’re aware of all of your federal student loans.”

      • Andrew Allison

        What you miss is that it’s their, apparently irresponsible and financially illiterate, parents who are making the decisions.

    • Andrew Allison

      Let’s stipulate that college education is defficient. The issue is that the debt is incurred before graduation.

  • FriendlyGoat

    Another case of the incorporated “business community” doing what it does best when free to operate under the libertarian world view. Why do we have these meddlesome attorneys general barging in to ruin good-ole American-style profiteering?

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