Nearly 350 Washington students to share in $162,000 recovery
SEATTLE — Attorney General Bob Ferguson today announced favorable resolutions for Washington consumers with six student loan debt adjustors that overcharged Washington state students and collected unlawful fees. Ferguson also obtained a default judgment against a seventh student loan debt adjustor for the same type of unfair and deceptive actions.
The six loan adjustors will pay a total of $162,000 to refund Washington students for illegal charges and an additional $56,000 for the Attorney General’s costs and attorney’s fees, as well as monitoring and future enforcement of the Consumer Protection Act.
All 346 Washington student victims will receive full refunds of the money they paid to the various companies. The Attorney General’s Office will notify eligible consumers and distribute the refunds directly to them in July 2016.
Student loan debt adjustment firms offer to help students fill out and submit paperwork to the U.S. Department of Education to consolidate their federal student loans. But information about repayment options and help consolidating federal student loans is available — for free — directly from the U.S. Department of Education. Borrowers can also contact their student loan servicer(s) for information about consolidation and repayment options like income-based repayment.
Many adjustor firms have sprung up as a result of the $1.2 trillion debt burden carried by nearly 40 million American borrowers. Student loans represent the second-largest source of consumer debt for Americans, behind home mortgages. Over 800,000 Washingtonians have outstanding federal student loan debt worth nearly $21 billion.
“Students graduate from Washington colleges with an average of nearly $25,000 in debt,” Ferguson said. “These firms preyed on students who sought their help. I will not tolerate the financial abuse of Washington students overburdened with debt.”
The named defendants, based in various locations outside Washington state, include:
- SLRS, LLC;
- Student Debt Solutions, LLC;
- United Advisors Group, LLC;
- American Student Loan Consolidators, LLC;
- Debt Relief Pros, Inc. d/b/a Student Debt Relief;
- US Direct Student Loan Services; and
- National Student Loan Solutions, Inc. (against which the AGO obtained a default judgment).
Ferguson brought lawsuits against the seven student loan adjustors for violating Washington’s Debt Adjustment Act and Consumer Protection Act by charging illegal fees for debt adjusting and failing to inform customers of important rights as legally required.
In addition to paying restitution and costs, as part of the resolution, the companies agree not to:
- Charge an initial fee for debt adjusting services of more than $25 (the legal limit);
- Charge a fee in excess of 15 percent of the consumer’s payment (the legal limit); and
- Engage in deceptive advertising or misleading business practices.
The companies charged an up-front fee for their debt adjusting services of between 4 and 27 times the legal limit, sometimes collected monthly payments in excess of the legal limit, debited their customers’ bank accounts for payments on void contracts, and failed to make legally required disclosures in their contracts with Washington consumers.
National Student Loan Solutions, Inc. did not contest a lawsuit filed by the Attorney General’s Office, and on March 10, 2016, King County Superior Court Commissioner Henry H. Judson ruled in the state’s favor for $9,302. The AGO will seek to enforce that judgment against the company, to obtain further restitution for Washington consumers, as well as costs, fees and penalties.
Assistant Attorneys General Benjamin Roesch and John Nelson were leads on these cases.
In 2015, Ferguson announced a judgment against another student loan adjustment company, StudentLoanProcessing.US, for similar unfair and deceptive practices.
Apply for U.S. Department of Education federal repayment programs for free
For most federal borrowers, the process for consolidating federal student loans and enrolling in income-driven repayment plans is fairly straightforward — the borrower fills out a short application, verifies his or her employment and income, and submits the package to the Department of Education.
This process is done through the Department of Education for free and typically takes four to six weeks. Income-driven repayment plans allow borrowers to pay a percentage of their discretionary income. Learn more at Federal Student Aid's website.
Free student loan debt assistance
Attorney General Ferguson urges students with questions about consolidating federal student loans to contact the Department of Education’s Loan Consolidation Information Call Center at
1-800-557-7392 before applying for consolidation. The Department of Education also provides technical assistance as borrowers fill out the consolidation application online.
Ferguson also urges current and former students never to pay upfront for help with student loan debt relief. For information on sources of assistance, contact the Consumer Financial Protection Bureau or the National Consumer Law Center.
For problems with your federal student loan servicer or a debt collector contact the U.S. Department of Education’s Student Loan Ombudsman at 1-877-557-2575 or online, or file a complaint with the Consumer Financial Protection Bureau or the Attorney General’s Office.
The Office of the Attorney General is the chief legal office for the state of Washington with attorneys and staff in 27 divisions across the state providing legal services to roughly 200 state agencies, boards and commissions. Visit www.atg.wa.gov to learn more.
Peter Lavallee, Communications Director, (360) 586-0725; PeterL@atg.wa.gov