Forty two million American are saddled with student loan debt.
But paying a company to help you get out of it, could leave you worse off than you started.
Like Melanie in Glendale, who let me know she contacted a company called Grads United. She says they took over her FAFSA account and told her to "ignore" her student loans. She did. Now she says they have been shut down by the Federal Trade Commission. She's late on her loans, and out of the $1,000 she paid them. She doesn't know what to do.
On it's website Grads United says it provides legal helps students of for-profit and closed universities who may qualify for class actions lawsuits.
Well now that company and several others are being sued by the Feds, accused of targeting alumni of for-profit colleges who are struggling to repay loans. In the complaint, the agency says the companies deceived students into believing they would reduce or even take over the loan and "illegally" charged them $1,000 up front.
The FTC was granted a temporary restraining order and the company is in receivership until a preliminary hearing determines otherwise. But an agency spokesperson tells me it will be a while before there's direct help for victims. If you're a victim, call your loan service to explain, and get information about a hardship program. Be very careful before refinancing your loans, especially if you're instructed not to pay or asked for upfront payment for services.