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FTC shuts down student loan debt relief scheme

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It’s a staggering number. More than 42 million Americans owe a total of nearly $1.5 trillion in student loan debt. It’s no wonder people look for help. But not all help is legit. Scammers are targeting borrowers with student loan debt relief schemes that can actually make things worse.

In a new case announced today, the FTC alleges the operators of Mission Hills Federal and Federal Direct Group bilked borrowers out of more than $23 million. The FTC says these companies lured people with false promises to pay down student loans and lower monthly payments. According to the FTC, the companies also lied about taking over the servicing of the loans, which tricked people into submitting loan payments directly to them. In fact, the defendants diverted borrower payments to themselves.

What’s more, many of these borrowers went months, sometimes years, before learning their student loans weren’t being repaid. Why? The FTC says the defendants made people give their federal student aid IDs, or other personal information, to enroll in the debt relief program. They used that information to change borrowers’ contact information on U.S. Department of Education websites, which limited the borrowers’ contact with their federal loan servicers.

If you or someone you know feels overwhelmed by student loan debt, know this: There’s nothing a company can do for you that you can’t do yourself for free. If you have federal student loans, start with If you have private loans, talk with your loan servicer. For more information, check out

Here are a few tips to help avoid debt relief scams.

Spotted a scam? Let us know about it at

Tagged with: debt, loan, scam, student
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Money & Credit


Bravo FTC!!!!! Bravo!!!!!

Congratulation FTC.

We received two of these calls: July 10 and two weeks prior. We paid off our student loans in full by 1975. Don't know why we are on the call list.

Im using "FedLoan Servicing", I hope they are a legitimate company?

The companies the FTC sued in this case are Mission Hills Federal and Federal Direct Group. You can read more about the case in the press release.

If you have federal student loans, you can use free information from the US Department of Education at to learn about repayment options.

I was one of these people that fell for this. 4 years later, the company I went through is under investigation. I recently called my student loan provider and spoke to them about the situation. Although they cannot do anything, I did find out that this company got me for 17,000. Instead of paying my loans down, I now have more debt. Be careful people, I didn't know better at the time.

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