Chicago ─ Attorney General Lisa Madigan today called on the U.S. Department of Education to initiate a program to provide certified nonprofit credit counselors for the millions of student loan borrowers seeking help to repay their federal student loans. Madigan said more qualified sources for help are needed as an industry of scam operations are increasingly targeting and exploiting borrowers for profit.
In a letter to Secretary Arne Duncan, Madigan urged the Department to adopt a program to certify nonprofit credit counselors who can serve as legitimate sources of help for borrowers in need of counseling on their repayment options, in particular borrowers who are in default. Madigan pointed to the counselors certified by the U.S. Department of Housing and Urban Development in the wake of the housing crisis that provided extensive support and resources for struggling homeowners.
“Student loan borrowers have nowhere to turn right now to access legitimate information and assistance about their repayment options,” Attorney General Madigan said. “It is critical that we provide these borrowers a lifeline before they make costly mistakes by turning to scam artists for help.”
Madigan’s letter comes amid a growing need for help among the millions of student loan holders nationwide who are not receiving adequate counseling from their student loan servicers to manage their debt load effectively. As student loan debt has climbed to $1.2 trillion nationwide, an industry of scam artists has taken notice. Student loan debt relief scams advertise on the radio, the internet and television, offering “free” consulting help to dramatically reduce payments or forgive student loan debt. Borrowers have paid as much as $1,200 to these scam artists in exchange for little to no help with their repayment options.
Last year, Madigan became the first state attorney general to file suit against student loan debt relief scams and has filed a total of seven lawsuits seeking to shut down operations across the country.
In addition to her lawsuits against student loan debt relief scams, Madigan created a new helpline within her office to assist student loan borrowers. Madigan’s Student Loan Helpline, 1(800) 455-2456 (TTY: 1 (800) 964-3013), is answered by trained staff in her office who can assist borrowers understand their repayment options and how to avoid default. Callers to the helpline can also file complaints with Madigan’s Consumer Fraud Bureau if they have problems with their loans or complaints of similar student loan debt relief scams. Information about the helpline and legitimate student loan debt relief can also be found on Madigan’s website.
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