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.