Companies that charge students to access free federal debt-relief programs should be investigated, a group of U.S. lawmakers said today in Washington.
Twenty-three Democratic senators led by Barbara Boxer of California and Tom Harkin of Iowa called on the Education Department, the Federal Trade Commission and the Consumer Financial Protection Bureau to follow up on a report showing that companies charged students as much as $1,600 up front and $50 in monthly fees to take part in federal repayment programs that are actually free. The senators cited a letter sent to the heads of the three agencies in an e-mailed statement today.
Debt from student loans totals more than $1 trillion and is among the most onerous forms because it can rarely be canceled through bankruptcy. A National Consumer Law Center report said last month that some debt-relief companies were capitalizing on desperation and confusion among students struggling to pay off their debts.
“We are deeply concerned by the report’s findings, which indicate that some private companies are mischaracterizing federal student-loan repayment programs as their own and charging exorbitant fees to enroll people in free government programs,” the Senators wrote in their letter.