AG Ferguson announces over $2M in recoveries for student borrowers
Oct 17, 2023, 3:14 PM | Updated: Nov 20, 2023, 12:23 pm
(Photo courtesy of KIRO 7)
Washington Attorney General Bob Ferguson announced Tuesday his office has recovered over $2 million for student borrowers.
More than 30 entities have been ordered to pay restitution to more than 2,650 Washington residents.
Ferguson’s office said in a news release the entities engaged in “unfair and deceptive practices, including unlawfully charging tens of thousands of dollars in excessive fees.”
Each borrower is expected to receive an average payment of over $750.
In its release, Ferguson’s office called out resolved cases against three out-of-state debt adjusters in 2023. They are now required to pay 495 borrowers $359,832 in restitution. The most recent resolution involved Skyway Financial Group. The agreement will affect 188 Washington borrowers who will receive a total of $139,591 in restitution.
Earlier this year, the state resolved cases with Total Rain (Student Aid Group) and Allied Document Prep (Global Business Group) that affected 307 borrowers for a total of $220,241.
Every impacted Washingtonian is receiving a full reimbursement of unlawfully charged fees.
Grace period for student loans has ended
The attorney general’s office notes the actions come at a time when the federal government is restarting student loan payments.
After more than three years, the COVID-19 pandemic grace period for student loans ended this month.
The first payments were due Oct. 1st. Interest resumed Sept. 1.
That action came as a survey from Bankrate out this summer shed light on how Americans feel about student loans.
The survey revealed that nearly half of those who have student loan debt (48%) believe it’s a national crisis and nearly one-third of all Americans (32%) agree with them.
“It is a chaotic time for millions of borrowers as student loan repayments resume after more than three years,” Ferguson said in his press statement. “My office is committed to protecting Washingtonians from companies that take advantage of consumers who are simply trying to manage their debt.”
Consumers who suspect they were charged or paid fees in excess of what is allowed under the law are encouraged to submit a complaint to the Attorney General’s Office Consumer Protection Division.
Unlawful actions taken by lenders
As part of its press release, Ferguson’s office stated consumers who suspect they were charged or paid fees in excess of what is allowed under the law are encouraged to submit a complaint to the Attorney General’s Office Consumer Protection Division.
The attorney general’s press statement notes that under the Debt Adjustment Act, the maximum upfront fee a debt adjuster can legally charge is $25. The companies Ferguson’s office investigated charged anywhere from several hundred to thousands of dollars in upfront fees.
Going to college? Here’s what you should know about student loans
Borrowers were also charged monthly “monitoring” fees in excess of the legal limit and without a clear understanding that these fees would span the life of the loan, Ferguson’s office said. The law limits those monitoring fees to no more than 15% of the payment amount. For example, a person paying $300 a month may not be charged more than $45 per month in monitoring fees.
The attorney general’s office also pointed out the following other unlawful actions by the cited debt adjusters:
- False claims of an affiliation with the federal Department of Education
- Aggressive marketing of “student loan forgiveness” for ineligible loans
- Claims of employing student loan “experts” when staff had no industry experience
- Claims to expedite loan consolidation despite an inability to actually do so.