BBB warns students about debt relief service scams

Posted at 6:54 AM, May 30, 2017
and last updated 2017-05-30 09:54:47-04

College graduation season is here, but for many students, that diploma comes with thousands of dollars in student loans.

The Better Business Bureau is warning people to watch out for companies that may be targeting vulnerable students.

One company, San Diego-based Student Aid Institute, was shut down by the Consumer Financial Protection Bureau for illegally selling debt relief services. The closure affected about 4,300 people.

Adriana Robles, who used a student loan to help her earn a business administration degree, said, "My original loan was in the mid- to high-twenties ($20,000)."

The mother of three said she received a call from Student Aid Institute, and the representative advertised a loan forgiveness program and promised to help reduce her debt.

Robles said she paid several hundred dollars upfront and a $39 monthly administration fee. She told Team 10 that Student Aid Institute also told her she qualified for debt forgiveness.

A couple of years after signing up, Robles noticed Student Aid Institute stopped the automatic withdrawals from her bank. She got a huge surprise when she started asking questions and contacted her loan carrier. Her loan carrier told her the loan was still at the same dollar amount.

"The student loan industry is one we're concerned about. It's fraught with bad actors," said Sheryl Reichert, the former president and CEO of the local Better Business Bureau chapter. "You want to make sure that you're paying the lender directly."

The CFPB said Student Aid Institute profited about $3.6 million from the "unlawful marketing and selling of Debt Relief Services."