Student Debt Relief Companies Profit from Borrower Confusion, Report Says

A National Consumer Law Center study says many debt relief companies are profiting on student borrowers.

President Barack Obama explains the steps the administration is taking to make it easier to manage student loan debt at Colorado University in 2011 in Denver, Colo.
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The bureau said it received numerous complaints from customers alleging that the business did not perform student loan consolidation services after having been paid. The bureau then asked for information about why the company believed customers were upset, as well as a course of action to resolve the complaints, but the consulting group said it did not believe it had a pattern of complaints. Instead, it stated that the increase in complaints was due to an increase in the number of customers it serves.

The 37 complaints detailed on the bureau's website, which have since been resolved with involvement from the bureau, allege "dishonest sales practices," "unauthorized bank debts" and "improper or inferior service."

"The industry needs some watchdogging, and should be playing by some basic rules that protect these borrowers as consumers," Lindstrom said.

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