Loan firms charge students for free services

Kylie Lacey's picture
Tuesday, July 30, 2013

Polly Williams, a single mother who had recently lost her job, was desperate to lower the payments on her $23,000 in student loans. So last June, she called one of the many companies advertising debt relief online.

For a $250 fee, the University of One, now known as Student Consulting Group, offered to help. To come up with the money, Williams skipped an electric bill and lost power, forcing her to throw out $150 of food in her refrigerator, she said.

Williams could have avoided the fee because the government offers borrower assistance programs for free. Still, a growing student-loan debt-relief industry is profiting from consumers’ confusion and desperation, charging as much as $1,600 to sign them up for these repayment plans, according to a report released last month by the Boston-based National Consumer Law Center, a nonprofit advocacy and research group.

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