When Rick Cibelli heard a radio ad last year promising to slash his student-loan payment, he called right away. As a caregiver in a group home for developmentally disabled adults, he was making minimum wage and struggling to repay the $10,000 he'd borrowed for a paralegal certificate more than a decade earlier.
When he called the toll-free number, the sales rep said the company, First American Tax Defense, was a contractor for the Education Department. He said that he could enroll Mr. Cibelli in the "Obama Forgiveness Program" and cut his monthly payment in half, but that Mr. Cibelli would have to pay $700 upfront.
Though somewhat suspicious, Mr. Cibelli signed up, and the company immediately charged $175 to his credit card. Later that day, he called the Department of Education to verify that the company was working on its behalf. The government representative said no and informed him that there was no federal "Obama Forgiveness Program."
The next day, Mr. Cibelli tried to cancel the contract but was told he couldn't. Furious, he filed complaints with federal regulators, the Better Business Bureau, and the Illinois attorney general. Eventually he persuaded his credit-card company to overturn the charge.
Mr. Cibelli's experience is not unusual. As more borrowers struggle to repay their student-loan debt, a growing number are turning to "debt relief" firms for help. The companies, which advertise heavily on the Internet, radio, and TV, promise to cut borrowers' monthly payments, stop wage garnishments, and secure loan forgiveness. Some even claim they can clear up customers' bad credit.
Read more at The Chronicle of Higher Education: http://chronicle.com/article/The-Pitch-Debt-Relief-The/148003