The debt relief industry isn’t exactly a glamorous one. The folks that charge large fees and promise debt freedom have often been ridiculed. Failure to produce promised results and downright unscrupulous business practices have given the industry a bad name over the past few years.
According to a story from Bloomberg yesterday, they haven’t changed, only their target customer has. As credit card debt declines in the U.S., student debt continues to grow. With that, the industry has set its sights on folks saddled with loans and promises them freedom. Bloomberg details the story of Polly Williams, a mother with $23,000 in student loans that just lost her job.
For a $250 fee, the University of One, now known as Student Consulting Group Inc., 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 entirely 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 to be released today by the Boston-based National Consumer Law Center, a nonprofit advocacy and research group.