WA recovers $2 million from ‘predatory’ student loan debt adjusters

With the recovery of $139,600 in restitution this week, Washington state’s yearslong campaign to prosecute student loan adjusters has now recouped more than $2 million for residents who were charged illegal fees.

Since 2017, more than 30 debt adjusters have been forced to pay back Washington customers for charging “excessive” fees related to managing their student loans, according to the state Attorney General’s Office. These settlements were paid out to more than 2,600 Washingtonians, averaging around $755 per person.

These debt adjusters are mainly offering to help students with the process of consolidating their federal loans, but loan consolidation is free if borrowers go directly through the federal government.

The Attorney General’s Office found several illegal practices, including false marketing about loan forgiveness and charging above the legal limit in fees. Some adjusters even claimed to be affiliated with the federal government.

“It is a chaotic time for millions of borrowers as student loan repayments resume after more than three years,” State Attorney General Bob Ferguson said in a news release. (Ferguson announced his candidacy for governor in May.)

Student loan payments resumed this month after pausing for several years during the pandemic. Many borrowers are still eligible for up to $20,000 in loan forgiveness through a Biden administration program.

The $139,600 that the state recovered most recently comes from Skyway Financial Group, a Texas-based debt adjuster that advertises a specialty in student loan forgiveness. Student Aid Group and Allied Financial were also required to pay out restitutions this year, totaling more than $200,000.

Each restitution came about because of a complaint from a consumer, according to the state. Borrowers who suspect illegal practices from a debt adjuster can submit their concerns to the state Attorney General’s Office.