by Ari Lazarus

Consumer Education Specialist, FTC

Student loan debt can be a heavy load to carry. That’s why there are a lot of companies claiming to help permanently reduce and wipe out federal student loan debt. But some of these companies don’t deliver what they promise – if you sign up, they take your money and do nothing to help you.

According to an FTC lawsuit, Arete Financial Group and related companies did just that. After requiring an illegal upfront fee for their services, Arete usually contacted a borrower’s loan servicer and placed the borrower’s loans into temporary forbearance or deferment status – often without the borrower’s permission or knowledge. Meanwhile, borrowers were sending in monthly payments that Arete said would go towards the borrowers’ loans – but the FTC is alleging the money really just went into Arete’s pockets.

So how did Arete and its partners get away with it? According to the FTC, borrowers thought Arete was legit – especially because they claimed to work directly with loan servicers and Department of Education. Instead, Arete changed borrowers’ Federal Student Aid (FSA) login ID, password, and contact information with their loan servicer. This cut off contact between borrowers and their loan servicers, so borrowers wouldn’t find out the truth until it was too late.

The FTC alleges that Arete’s lies led to very real harm to borrowers. Some people’s loans are now delinquent, and their income tax refunds are being garnished. And all those monthly payments to Arete that never actually went towards borrowers’ loans? That money is gone.

Remember: you don’t have to pay for help with your student loans. There’s nothing a company can do for you that you can’t do yourself for free. If you’re a federal borrower, start with StudentAid.gov/repay. If you’re a private borrower, start by talking with your loan servicer.

Looking for more tips? Check out the video above.

Spotted a student loan relief scam? Let us know about it. And for more resources on student loans, check out FTC.gov/StudentLoans.