Posted Date:March 30, 2016
|Author:||James W. Runcie, Chief Operating Officer, Federal Student Aid|
Subject: Third-Party debt relief companies’ use of institutional names, logos and other trademarks.
On January 28, 2016, the Department of Education sent cease and desist letters to two third-party "debt relief" companies that were using ED's Official Seal without authorization. The misuse of the Department of Education's Seal is part of a growing and worrying trend. Some of these companies are charging large up-front or monthly fees for federal student aid services offered by the Department of Education and its student loan servicers for free. Such services include:
- Consolidating federal student loans;
- Changing repayment plans;
- Resolving defaults;
- Filing requests for borrower defense loan cancellation; and
- Other benefits and services that students are entitled to receive at no charge.
These debt relief companies may utilize sophisticated strategies to target unsuspecting borrowers and inappropriately use the Department of Education's logo or other identifying information to give the impression that they were working with or for the government.
We are also aware that sometimes the tactics used by these companies state or imply that the company is working with a postsecondary institution to provide a benefit to student loan borrowers. We strongly recommend that each institution monitor whether there are organizations that are using the institution's name, mascots, logos, trademarks or other identifying information in a manner that has not been authorized by the institution. If an institution believes that an organization is using, without the institution's approval, the institution's identity as part of its marketing efforts, it should consider contacting its Attorney General's Office or other state consumer protection agency or consider taking legal action against such companies.
While we continue our work to ensure that student loan borrowers understand that these services are offered for free, we are asking institutions for their help in the following ways:
- Provide warnings to students, including on institutional websites, about so-called debt relief companies.
- Provide information to students indicating that they do not need to pay for loan benefits for Federal student loans.
- Review institutional websites to ensure that they provide the most up-to-date information about the terms and conditions of federal student loans and the servicing of those loans. In reviewing several institutions websites, we became aware that some sites contain outdated information about the Direct Loan Servicing Center and had directed students to call a number that is no longer associated with the Department of Education.
We have a variety of resources on our websites and in other places that institutions can use to help get the word out and inform their students of Federal student loan repayment options and other important information, including:
- Information on StudentAid.gov;
- Information about student loan repayment at StudentAid.gov/repay;
- A video message on YouTube from former Secretary of Education, Arne Duncan;
- A blog post on the ED.gov from the Department of Education's Ombudsman;
- A blog post on the ED.gov and an article on Medium.com from Under Secretary of Education, Ted Mitchell; and
- A video message on YouTube from acting Secretary of Education, John King.
We have also used social media to tell borrowers to avoid paying unnecessary fees to third party debt-relief companies and encourage schools to use similar means. See the attached for some examples.
In December 2014, the Consumer Financial Protection Bureau issued a consumer advisory concerning third-party debt relief companies that schools may wish to use in informing students about these companies. The advisory includes four warning signs of third-party debt relief companies that student loan borrowers should avoid, including:
- Pressure to pay high up-front fees;
- Promises of immediate loan forgiveness or debt cancellation;
- Demands that you sign a "third party authorization"; or
- Request for a student's Federal Student Aid PIN or FSA ID.
We thank you for your cooperation in ensuring that students are not misled by third-party debt relief companies.