Reps. Smucker, Stevens Introduce Legislation to Crack Down on Student Debt Relief Scammers
WASHINGTON – On Tuesday, May 21, Congressman Lloyd Smucker (PA-11) and Congresswoman Haley Stevens (MI-11) introduced H.R. 2888 the Stop Student Debt Relief Scams Act, a bipartisan bill that would give the U.S. Department of Education and law enforcement agencies the tools needed to identify and shut down student debt relief scams. The bill also provides student loan exit counseling to inform federal loan borrowers about debt relief scams.
With Americans facing over $1.5 trillion in student loan debt, predatory scammers are increasingly taking advantage of student loan borrowers who face a complicated loan repayment process. These schemes robocall student loan borrowers until they agree to pay unnecessary and exorbitant fees for services that are often already available for free. The victims of these schemes are not only defrauded, but also unknowingly become delinquent on their payments and default on their loans, falling deeper into debt.
“The web of student loan repayment options that borrowers must navigate is complicated enough. That’s why I was disgusted to learn that scammers are leveraging this confusion to con hardworking borrowers who are trying to repay their student loans. These immoral companies are charging borrowers for information U.S. Department of Education loan servicers provide for free, pressuring borrowers to enroll in fake repayment plans, stealing money from borrowers that was intended to pay down their loan balance, and in many cases leading a borrower into default – impacting their financial futures forever,” said Congressman Smucker. “I am proud to partner with Rep. Stevens on this critical issue to strengthen federal law to impose stricter penalties on these scams. I urge swift consideration of this bill to prevent borrowers from falling victim to these so-called ‘debt relief’ companies.”
“Education Finance Council (EFC) is proud to endorse this legislation, which will enhance law enforcement and administrative abilities to identify and shut down student debt relief scams,” said Debra J. Chromy, President of the Education Finance Council. “We applaud Representatives Smucker and Stevens for their efforts to hold fraudulent organizations accountable and protect student loan borrowers.”
“Millions of Americans are working hard to pay off their student loan debt, and they deserve to be protected from scammers who want to take advantage of them for financial gain,” said Congresswoman Stevens. “I am proud to introduce the Stop Student Debt Relief Scams Act, because we have to stop these scammers from jeopardizing the financial future of student borrowers. It’s time to give law enforcement, the Department of Education, and borrowers themselves the tools they need to put an end to these scams.”
“Protecting student loan borrowers from these so-called debt relief scammers is the exact kind of smart legislation that we should all get behind since it directly affects millions of Americans,” said Scott Buchanan, Executive Director of the Student Loan Servicing Alliance. “As borrowers’ official student loan servicers, who today already can provide borrowers all their options, we know that preventing these kinds of bad actors from defrauding families is a great step forward. Thousands of borrowers have been taken advantage of, and so we support Representatives Smucker and Stevens in being key leaders in the House by sponsoring this bipartisan and common sense legislation to protect families.”
“The National Council of Higher Education Resources (NCHER) strongly supports the ‘Stop Student Debt Relief Scams Act of 2019,’ which will crack down on unlawful and unscrupulous third-party debt relief companies that target struggling borrowers and drive them deeper into debt. This important bill will protect students and families, allowing borrowers that are delinquent on their payments or in default to receive the specialized help that they need from their federal student loan servicers – for free. NCHER and its members are proud to endorse this important piece of legislation and work for its passage during the 116th Congress,” said NCHER President James Bergeron.
The Stop Student Debt Relief Scams Act of 2019 will enhance law enforcement and administrative capabilities to identify and shut down student debt relief scams. Specifically, the legislation will:
- Clarify that it is a federal crime to access U.S. Department of Education information technology systems for fraud, commercial advantage, or private financial gain, and impose fines on scammers for violations of the law;
- Direct the U.S. Department of Education to create a new form of third-party access, akin to the current “preparer” function on the Free Application for Student Aid (FAFSA), for those applying on behalf of a student and their family, in order to protect legitimate organizations;
- Require the U.S. Department of Education to maintain common-sense reporting, detection, and prevention activities to stop potential or known debt relief scams; and
- Require student loan exit counseling to warn federal loan borrowers about debt relief scams.
This bill is endorsed by the Education Finance Council, National Council of Higher Education Resources, Student Loan Servicing Alliance, National Consumer Law Center (on behalf of its low-income clients), and the Institute for College Access and Success.