Hoping to help those struggling to repay student loan debt, Attorney General Maura Healey announced Tuesday that her office is launching a student loan assistance unit and cracking down on predatory student debt relief companies in the state.
In a press release, Healey's office says it settled with two companies it alleges charged illegal upfront fees to file applications for federal student debt relief. Students can fill these forms out themselves online for free.
"We allege Student Loan Processing and Direct Student Aid charged illegal fees, engaged in aggressive marketing practices and misled borrowers about their ability to arrange lower monthly payments," Healey told WBUR.
Healey's office says advertisements from the two companies made it seem like they were connected to the federal government and could help borrowers obtain unusually low monthly payments.
The two companies agreed to pay the state a total of $96,000 to settle the allegations. Some 200 students allegedly harmed by the companies may be eligible for relief, Healey's office said.
Under the settlement, the companies are also barred from continuing to operate or advertise in the state.
In the statement, Healey's office noted that federal student loan servicers "often fail to do their jobs to help students enter into affordable payment plans, resulting in debt relief companies offering their services in exchange for exorbitant fees that violated state law."
In an effort to close that assistance gap, Healey also announced Tuesday her office is launching a unit to help student borrowers who are struggling to pay their loans. Those in need of advice can visit the AG's new student lending assistance website or call the office's student loan assistance hotline at 1-888-830-6277.
For students with federal student loan debt, the federal government offers programs such as loan consolidation, income-based repayment plans and loan forgiveness directly and for free through the U.S. Department of Education.