Company Allegedly Ripping Off Student Loan Borrowers Declares Bankruptcy

by San Antonio Attorney

Student Aid Center Inc, a company accused of scamming student loan borrowers, recently filed for bankruptcy claiming an amount of $500,001 and $1 million in assets. Their estimated liabilities range from $1,000,001 and $10 million dollars.

In the company’s social media promotion, it implies that it has a connection with the Department of Education. Student Aid entices borrowers to pay expensive fees in order to register in government programs for free.

Two student loan debt relief companies have been warned by the Consumer Financial Protection Bureau due to the violation of consumer protection laws. The Department of Education has already released cease and desist letters these companies last month, marking it as the office’s first remedy against fraudulent companies claiming to offer loan assistance.

Student Aid Center filed for bankruptcy months after Lori Swanson, the Minnesota Attorney General, filed a lawsuit against the company. Swanson accused the company of using false identity and promising borrowers that they would be qualified for loan forgiveness programs and pay the loans at the same time. Student Aid charged $500-$1500 for registration fee.

Student loan attorney Adam Minsky, stated that Student Aid Center’s bankruptcy makes it is unlikely for borrowers severely affected by the company to recover their money once the state attorney general settles with Student Aid.

Minsky added that it is inevitable that Student Aid would file for bankruptcy because their structure of business is designed to depend on customer’s fees for revenue.

However, filing for bankruptcy, is oftentimes an indicator and a company will be deemed ‘insolvent’ if it doesn’t have financial resources to comply with its obligations. Consumers are bound to have a difficult time obtaining any compensation.

Student Aid became widely known from 2014, when they were a target of a class-action suit, allegedly harassing consumers via robocall and offering unsolicited services.

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