On Monday, the House passed S. 1153, the Stop Student Debt Relief Scams Act, a bipartisan, bicameral bill that will crack down on third-party debt collection scammers who exploit vulnerable students.
The Problem
Over 40 million Americans owe $1.5 trillion in federal student loan debt. Hundreds of malicious third-party debt collection companies are selling students on the notion that their company will reduce or make the student’s loan debt disappear.
The scammers trick borrowers into paying an exorbitant fee for a service that is already available for free. Victims of the scheme usually become delinquent and enter default as a result.
The Solution
The Stop Student Debt Relief Scams Act will help federal and state officials take action against these debt collection scammers.
This bill clarifies it is a federal crime to access Department of Education information technology systems for fraud, commercial advantage, or private financial gain, and penalizes scammers with a fine of up to $20,000, imprisonment up to a five-year sentence, or a combination of both.