It was an unexpected call offering Annette Loynaz a plan to start paying a federal student loan of $39,897 that got her attention.
“I had no clue who they were but I thought they were the owners of the loan,” she said.
Loynaz says The Florida-based company, Strategic Student Solutions, put her on a monthly payment plan she thought would help erase that loan.
Catie Cormier says she got a similar offer from the same company. She was looking for a way to finally get rid of the roughly $13,000 in student debt she had been struggling to pay for the past decade.
“I fell for it,” Cormier said. “When they presented how they could help me it sounded like ok, it’s going to be tough but this might actually be a solution to help me deal with my student loan debt.”
Both women entered into agreements with the company and made payments. Months later, both say they realized the money they had been sending the company had not been applied to their debts.
Earlier this year, the Federal Trade Commission froze the assets of Strategic Student Solutions. The FTC has announced it is cracking down on similar companies nationwide, including three other Florida-based companies: American Student Loan Consolidators, Student Debt Doctor and Student Aid Center. The companies are accused of using deceptive practices and false promises of relief to take more than $95 million in illegal upfront fees from consumers over several years.
“You don’t need these types of companies,” said Cinthya Lavin, director of communications for the Better Business Bureau of South Florida.
The BBB recommends going straight to the source if you have student debt you’re struggling to pay.
“Department of Education is the best bet,” said Lavin. “It’s better to pay your loan little by little than to just pay a company that promises to get rid of your loan and it’s not doing anything to remove your debt.”
Loynaz’ debt, meanwhile, grew to more than $50,000 and she said her credit score is now low. She decided to work out a payment plan directly with Fed Loan, the owner of her debt.
“Make sure that you are sending money to the right people not to anyone who calls you because it’s very deceiving,” she said. “I’m thinking my God I’m so old and they got me.”
Loynaz tried to recover the money she paid Strategic Student Solutions but said they only offered to return a portion of what she had paid if she agreed not to sue them. She declined the offer and chose to file complaints instead.
The company’s website has been shut down and there is a message on it telling consumers to register and continue to check back periodically for updates. If the court sides with the FTC in these cases, there is a chance consumers might be able to recover some of their money. But that process will likely take some time.