Companies are increasingly targeting student debt borrowers by selling scams that promise to help reduce or forgive loans, The Wall Street Journal reports.
The scams come as student debt is soaring—it is now nearly $1.5 trillion—and defaults are at a record high, with $89.2 billion worth of student loans defaulted on at the end of June.
Some of the companies identified by WSJ are legally allowed to operate but have still been flagged by regulators who say the services they charge for are usually free otherwise. Other companies are outright fraudulent, regulators say.
The Federal Trade Commission and the Consumer Financial Protection Bureau have oversight responsibilities of these companies, but they have had issues controlling the scams because the firms offering these debt services sometimes use several names.
For example, the same positive testimonials appeared across 26 websites of supposedly different companies. One company called Financial Preparation Services submitted claims for federal loan relief with fake information, a former employee said.
Federal relief programs do exist and offer a reduction or forgiveness of debts for those who qualify, such as public-service workers or people with low incomes. Last week, President Trump signed an executive order that will cancel student loan debt for permanently disabled U.S. military veterans.
