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Report is critical of student debt relief agencies

Florida students may be interested in a new report on student debt relief agencies that was issued on June 19. The National Consumer Law Center issued the report, which was critical of the education debt relief firms and shined a light on possibly unscrupulous business practices. In response, 23 U.S. senators have signed on to a letter that asks federal agencies to investigate the companies in question.

The report claims that many student debt relief firms charge for services that the government already provides at no cost. The firms also reportedly advertised government services as their own. The firms use these practices in an effort to get money out of individuals who are already struggling with debt. Some of the companies in question charge up to $1,600 upfront, along with up to $50 per month, for services that can be accessed for free.

The Senators sent their letter to the heads of the Department of Education, the Federal Trade Commission and the Consumer Financial Protection Bureau. In the letter, the Senators said that existing laws should be enforced and new laws may need to be implemented. A spokesperson for the Department of Education said that an investigation of private debt relief agencies was beyond the scope of the Department's capabilities. However, he did say the Department had launched a new website, studentaid.gov, that provides valuable free information on how to manage student loan debt.

Student loan debt is often a driver of greater debt problems and financial difficulty. Students may take loans without considering the significant repayment costs. If the student earns less than expected or goes through a challenging financial situation, the student loan debt may go unpaid and lead to further costs and debt issues. Individuals struggling with debt have options. An attorney with debt and bankruptcy experience could analyze an individual's financial picture and make recommendations on how to restructure or eliminate the debt in an acceptable manner.

Source: ABQ Journal, "Senators seek probe of student debt relief firms", Michael Coleman, July 18, 2013

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