Biden's Federal Trade Commission refunds $4 MILLION to student borrowers involved in loan scams

On Wednesday, the Biden administration’s Federal Trade Commission, chaired by Lena Khan, announced that it would be sending over $4.1 million to Americans who were tricked out of money by student debt relief scammers between 2014 and 2019. 

The fraudulent companies allegedly made millions by convincing graduates that, for an upfront fee, they could have their monthly payments slashed. In reality, most of that money was pocketed by those carrying out the schemes.

In a statement, the FTC revealed that a total of 27,584 people will be receiving checks of varying amounts. Those to whom money is sent have 90 days to cash in.

The schemers, the agency explained, operated under numerous names, including Mission Hills Federal, Federal Direct Group, National Secure Processing, and The Student Loan Group. 

In 2019, the FTC filed a complaint against those in charge of Mission Hills Federal and Federal Direct Group, alleging that they "tricked students into paying hundreds to thousands of dollars in illegal upfront fees and pretended to lower consumers’ monthly student loan payments."

"The operators also tricked consumers into sending their monthly student loan payments directly to the defendants by falsely claiming to take over the servicing of the consumers' loans," the statement continued. "In reality, few payments were actually applied to consumers' student loans and in many cases, none at all. Instead, the defendants kept consumers' money for themselves." 

In the complaint, the FTC explained that telemarketers working for the phony companies would ring up potential customers and promise unreasonably low monthly payments. 

"For example," it read, "one consumer who had been paying $200 per month was told her new monthly payment would be $50; another consumer who had been paying $130 per month was told the new payment would be $61." 

Americans owe trillions in student loan debt, making the prospect of lower payments an appealing one. While plans have been proposed by the Biden admin to forgive massive amounts of that debt, many have not come to fruition. 

Last year, for instance, the Biden administration's plan to forgive $10,000 in federal student loans for borrowers making up to $125,000, and $20,000 for students who took out Pell Grants was struck down by the Supreme Court.