​​Student Loan Debt Co Tricked Borrowers Into Paying Hundreds in Fees, Class Action Alleges

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Student Loan Debt Scam Class Action Lawsuit Overview: 

• Who: A borrower has lodged a class action lawsuit against student loan debt company, Student Loan Financial Assistance LLC.
• What: The plaintiff says that the company tricked student borrowers into paying excessive fees by leading them to believe it was associated with the US Department of Education.
• Where: The lawsuit is pending in California federal court on behalf of student borrowers nationwide.

Student Loan Financial Assistance LLC preys on students’ anxiety and confusion around student loan debt, and misrepresents the cost and features of federal loan repayment programs so it can extract unnecessary fees from struggling borrowers, a new class action lawsuit alleges.

The class action was filed in California by lead plaintiff Larraine Alford who alleges that Student Loan Financial Assistance (SLFA) gained borrowers’ trust by misleading statements making it appear to work for the US Department of Education, the government, or the customers’ loan servicer.

SLFA then told the students it could provide debt relief services to borrowers with student loan debt, falsely claiming it could save them substantial funds by getting them into loan repayment plans that would substantially reduce their monthly payment or completely eliminate their debt, the claim reads.

Student Loan Debt Co Charges Fees for Free Services, Claims Borrower

SLFA charges upfront fees of around $1,000 for consolidating a consumer’s loan and placing the consumer into a loan program, Alford says. 

Despite the company’s representations, these fees are not applied to the loan and, in many instances, the consolidation through the Department of Education, which is available for free, does not actually happen.

On top of the advance fee, SLFA also charges consumers a monthly fee, the class action states, with the company falsely representing that this amount will be the consumer’s new, reduced monthly loan payment.

“Defendants collect and retain these monthly fees, however they do not apply the monthly fees to pay down consumers’ loans, as consumers are led to believe,” the claim alleges.

To pay these fees, SLFA agents get the borrowers’ bank, debit or other payment information during a telemarketing call, and begin collecting the fee installment from consumers immediately. These fees are collected before enrolling the consumer in any federal program, the claim alleges.

“Consumers have paid Defendants hundreds of dollars in monthly fees they cannot afford before discovering that none of those fees were applied to pay down their student loan.”

Importantly, the claim reads, borrowers can apply for loan repayment and forgiveness programs through the Education Department or their student loan servicers at no cost. The Department and state government agencies also administer a limited number of student loan forgiveness and discharge programs, and none require a third party.

Borrowers Duped by Student Loan Debt Co

Alford, who has student loan debt of approximately $70,000, claims she believed she was speaking with her loan servicer FedLoan Servicing after being contacted by SLFA several times. She says she was never aware she was speaking with a third-party company who had no relations with the Department of Education, the government, or her loan servicer.

Believing she was speaking with her loan servicer, she provided her username and password and SLFA proceeded to change her password and “accept” her into the debt relief program, charging her $198 for three months. 

After being charged, Alford could no longer reach the company and she was told by FedLoan Servicing, her loan servicer, that none of the payment she had made went towards her student loan and that she was scammed by the company.

“Consumers often discover that they have been scammed only after talking to their actual loan servicer and realizing that Defendants charged them hundreds of dollars to enroll in a program that they could have enrolled in by themselves, for free.”

Alford wants to represent anyone in the United States who uses SLFA’s services. She is suing for violation of California’s Unfair Competition Law, negligent misrepresentation, unjust enrichment, false advertising, theft, conversion, and violation of the Electronic Funds Transfer Act.

She is suing for certification of the Class, order of enjoinment, restitution, damages, attorneys fees and costs, and a jury trial.

Check out the Federal Student Loan Scam Calls Class Action Lawsuit Investigation (links to paid attorney advertising). 

Alford is represented by Ronald A. Marron, Alexis M. Wood , Kas L. Gallucci of the Law Offices Of Ronald A. Marron.

The Student Loan Debt Scam Class Action Lawsuit is Alford v. Student Loan Financial Assistance LLC, Case No. 8:21-cv-01521 in the U.S. District Court Central District Of California – Santa Ana Division.

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