ADEA State Update

New York Student Loans

(State Policy, Department of Education, Financial Aid, Higher Education, State Court) Permanent link   All Posts

On Sept. 20, 2018, New York Attorney General Barbara D. Underwood sued nine student loan debt relief companies and two executives for allegedly using deceptive practices to convince thousands of student loan borrowers to purchase debt relief services already available for free from the U.S. Department of Education or their student loan servicer.

The suit alleges multiple violations of law, including falsely claiming to be affiliated with the federal government, making multiple misrepresentations to induce consumers to enroll in their services and charging consumers illegal upfront fees and/or higher interest rates than is permitted by New York state law. New York’s civil usury limit is 16%, while one of the accused companies charged as high as 20.99%.

The defendants typically charged each student $1,000 for their services and accepted scheduled payments from borrowers who believed that these payments were either going directly toward their loans or to a refinanced loan. As a result, some borrowers stopped making payments on their actual loans, ultimately owing more on their student loans due to the missed payments. 

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