Minnesota Attorney General Lori Swanson sued a Florida-based company Wednesday saying it baits student borrowers with promises of loan forgiveness, charges exorbitant fees and misrepresents what it can do.
The Student Aid Center charges borrowers $500 to $1,500 to sign them up with the federal Department of Education for student loan repayment plans or consolidation loans — but borrowers can apply for those on their own for free, Swanson's office said.
She alleged the company has misrepresented to some borrowers that it will "take over" or otherwise pay off outstanding loans or that the firm can qualify them for student loan forgiveness.
"In fact, it is the United States Department of Education that determines whether a borrower might qualify for loan forgiveness, not Student Aid Center," the attorney general's office said in a statement announcing the lawsuit. "Loan forgiveness is available only in certain limited circumstances and can require decades of payments before a final decision is made on whether loans will be forgiven."
There was no immediate comment available from the company.
Swanson also alleged that Student Aid Center persuaded some borrowers to provide it with their confidential loan personal identification codes and other information and submitted to loan servicers power of attorney forms that borrowers did not sign or did not sign in front of a notary.
Besides the suit filed in Hennepin County District Court seeking an injunction and restitution against the company, Swanson's office also issued a blanket warning to Minnesotans about companies that "charge high fees for what you can do for free."
It also maintains a webpage with advice on avoiding student loan assistance scams.