September 5, 2019
SUPERINTENDENT OF FINANCIAL SERVICES LINDA A. LACEWELL LAUNCHES NEW INVESTIGATION INTO STUDENT “DEBT RELIEF” INDUSTRY
Subpoenas Issued to Eight Student Debt Relief Companies Concerning Potentially Deceptive Advertising and Improper Monthly Fees
Investigation is Part of DFS’ “Step Up for Students” Initiative to Protect Student Loan Borrowers from Discriminatory and Predatory Practices by Companies in the Student Loan Industry
NEW YORK – Superintendent of Financial Services Linda A. Lacewell today announced the Department of Financial Services (DFS) is launching a new investigation into the student “debt relief” industry. DFS is issuing subpoenas to eight student debt relief companies as part of an investigation into deceptive practices, including misleading advertising and unscrupulous fees.
The investigation will focus on whether members of the industry are charging hefty, improper fees structured as monthly subscriptions without alerting student loan borrowers enrolled in debt relief programs that these services are otherwise available for free through the federal government.
“As part of the recently launched 'Step Up for Students' initiative, DFS is continuing to safeguard student loan borrowers from unfair and deceptive practices,” said Superintendent Lacewell. “Students looking to invest in their futures deserve, at a minimum, a level playing field, and we will use every tool at our disposal to ensure that they are not exploited.”
The burden of student debt affects three million New Yorkers, who collectively owe over $86 billion in student loans. They are part of more than 44 million Americans with over $1.4 trillion in student debt. Currently, more than one-tenth of that amount is considered delinquent.
Deceptive student debt relief companies charge borrowers high fees to consolidate multiple student loans into a single loan. However, the same programs that these companies advertise are available through the U.S. Department of Education – free of charge. Additionally, there are reports of companies charging inappropriate fees and misrepresenting their ability to achieve the debt relief they advertise to borrowers with private loans.
Consumers who wish to submit a complaint can do so at www.dfs.ny.gov/complaint, or call the hotline at (800) 342-3736. The hotline is available Monday through Friday, 8:30 AM to 4:30 PM (local calls can be made to (212) 480-6400 or (518) 474-6600).