Here's a problem I am seeing more and more of as student loans skyrocket. As reported in the ABI Journal, Student Aid Center Inc. filed for bankruptcy last week, claiming between $500,001 and $1 million in assets and between $1,000,001 and $10 million in estimated liabilities, MarketWatch.com reported on Friday.
The company is part of a burgeoning industry of student debt-relief firms that regulators have accused of preying on borrowers desperate for help with their student loans. The companies use social media and other forms of advertising, often implying an affiliation with the Department of Education, to lure borrowers into paying high fees to enroll in government programs they could take advantage of for free, consumer advocates say. The Consumer Financial Protection Bureau and states attorneys general have filed lawsuits against some of these companies, accusing them of violating consumer protection laws.
Student Aid Center’s bankruptcy comes several months after Minnesota Attorney General Lori Swanson filed a lawsuit against the company, accusing the firm of misrepresenting itself to borrowers by telling them it could help them qualify for loan forgiveness programs, that it would “take over” or pay borrowers’ loans and by lying about the amount that at loan would drop with the help of their services. In addition, the company charged between $500 and $1,500 to sign borrowers up with government programs they could otherwise access for free, Swanson’s suit claims.