Our June 2013 report Searching for Relief highlights problems with the emerging student loan “debt relief” industry. Since then, the CFPB issued an advisory reminding borrowers that they do not have to pay money to get assistance with student loans. Senators Boxer and Harkin and 21 of their colleagues wrote a letter in July calling on federal officials to investigate these companies.
More recently, a new sheriff rode into town…from within the industry. The new student loan debt relief trade association, the Association for Student Loan Relief claims to be the leading association of professionals “…associated with the sole purpose of assisting Americans burdened with student loan debt.” But who are they really and will the industry really regulate itself? It can certainly help for an industry to set voluntary guidelines and standards, but it was never enough in the foreclosure rescue or credit card debt settlement industries and it won’t be enough this time either.
The new organization’s officers claim to be open to government regulation and sensitive to the issues we raised in our report. If so, here’s our main message to AFSLR–If you sincerely want to be transparent, start with your own web site! You should make clear that the “services” you list are all available for free from the government.
The services section of the AFSLR web site lists products such as consolidation, loan forgiveness, deferral and cancellation. These are all options that are available for free and that qualified borowers are entitled to by law, but it doesn’t say that on the web site. In addition, if the member companies have special expertise to help borrowers obtain these options, they should say so. But this is far from clear. Only the cancellation category on the web site refers to the federal government, stating that there are a number of programs offered by the federal government which can lead to the cancellation of certain loans. How does this fit in with the services the members claim to offer? This isn’t clear. Why not refer borrowers to the government web site or to neutral web sites like ours for more information? Most important, the association and its members must disclose prominently that the programs they claim to specialize in are actually federal government programs that an individual can access on her own at no cost.
We will be keeping a close eye on this association and we urge borrowers (and regulators) to do so as well. Please let us know your experiences.