NEW YORK (MainStreet)The debt relief industry has long been the bane of broke borrowers in many areas of consumer finance. Now they've discovered the student loan market and while they're kind of late to this party, they've been making up for lost time as the demand for student loans show no sign of abating.
A June 19 report from the Washington, DC-based National Consumer Law Center (NCLC) found that firms offering pay-for-play debt relief were making life more difficult, not easier, for student loan borrowers. Potential violations of state and federal consumer laws were at the top of their list of findings, as was a lack of information on the services offered and the debt relief companies themselves.
"There were a shocking number of inaccuracies and lack of transparency among the companies in our investigation," said National Consumer Law Center attorney Deanne Loonin and author of "Searching for Relief: Desperate Borrowers and the Growing Student Loan 'Debt Relief' Industry. "We hope that the U.S. Department of Education will make it easier for student loan borrowers to access its borrower assistance programs, and that federal and state authorities will ensure that these companies comply with the law so that those consumers truly understand what services they are buying."
Among the problems the NCLC found were the practice of charging for services that could be obtained for nothing. In many cases, debt relief companies do not pro-actively disclose that programs they are toutingfor a feeare readily available from the federal governmentfor free. The gap between the U.S. Department of Education's borrower assistance programs and the failure to make them available to people who need them is an opportunity the debt relief industry is exploiting.