Key Points on FTC Cracks Down
- The FTC has permanently banned multiple companies and individuals for running fake student loan debt relief operations that promised forgiveness and charged illegal fees. FTC Cracks Down
- These scams often targeted borrowers by claiming to be affiliated with the Department of Education and using fake testimonials to promote false promises.
- Officials are warning borrowers to be cautious and seek help only through official resources like StudentAid.gov. FTC Cracks Down
Federal regulators have stepped in to shut down one of the largest student loan scams in recent memory. The Federal Trade Commission announced in May 2025 the permanent ban of several companies and individuals from the debt relief industry. FTC Cracks Down
The entities, including Florida-based Start Connecting LLC and Colombia-based Start Connecting SAS (doing business as USA Student Debt Relief), were accused of misleading thousands of student loan borrowers with illegal promises of forgiveness and fixed payments.
The operators falsely claimed to be working with the U.S. Department of Education and made use of fake reviews. Promises of permanent relief from high loan balances lured borrowers. In reality, the companies collected millions in illegal advance fees and sent large sums to overseas call centres, leaving borrowers with nothing but additional stress and confusion.
The FTC recovered over $1 million in personal and business assets from the companies’ operators and imposed a suspended judgement of $7.3 million. If the parties are found to have lied about their finances, the full amount will be due.
The case serves as a reminder that as the student loan chaos continues, student loan scams will rise.
False Promises And Fake Reviews
The FTC’s enforcement action cited several forms of misconduct. In complaints filed in U.S. District Court, regulators said that the defendants: FTC Cracks Down
- Claimed to be affiliated with the Department of Education
- Promised loan forgiveness or fixed low monthly payments
- Illegally contacted tens of thousands of consumers listed on the Do Not Call Registry
- Marketed their services using false testimonials and fake social proof
These operations often relied on confusion around potentially changing rules for student loan repayment. They exploited the changing terminology, programme names, and loan forgiveness options to make them appear legitimate. But instead of helping borrowers, the companies simply pocketed advance fees and failed to enrol anyone in actual federal repayment plans. FTC Cracks Down
Remember, if you see anything called Trump Loan Forgiveness Options or Biden Loan Forgiveness Options… it should be a red flag.
In one of the more egregious scams, borrowers were told their monthly payments were going directly toward their student loans. But the money was never applied to any loan balance. Instead, it was routed through a network of shell businesses and transferred abroad. FTC Cracks Down
The settlement terms now prohibit the named individuals from working in any debt relief business in the future, charging advance fees, or making any deceptive claims about their affiliations or services.
What Borrowers Should Watch Out For
The crackdown comes at a time when federal student loan payments are resuming after years of pauses and court challenges. Scam operators have thrived due to the confusion surrounding eligibility, payment timelines, and policy changes.
Federal officials are urging borrowers to be cautious. If someone unexpectedly contacts you, promising to eliminate your loan or reduce your payments for a fee, it’s likely a scam. The Department of Education and its official loan servicers do not charge fees to apply for forgiveness or to consolidate loans.
Furthermore, if you see social media posts from what can best be described as random individuals, moms, or other folks saying how a service helped them and to DM them for more – run away or report them. The Department of Education and loan servicers won’t DM you via social media. And real news organisations reporting on students don’t operate that way. FTC Cracks Down
Borrowers can visit StudentAid.gov for free and official help. They can also report suspicious activity to the FTC at ReportFraud.ftc.gov.
Here are some red flags to avoid: FTC Cracks Down
- Requests for up-front payments to “qualify” for forgiveness
- Promises of instant debt cancellation or enrollment in secret programs
- Claims of special access to government relief
- Pressure to act quickly or risk losing benefits
- Emails or calls that imitate federal agencies without verifiable contact information
- Asking you to DM on social media to avoid public comments or contact information
Finally, your official loan servicer will be found at [loanservicername].studentaid.gov. For example, MOHELA is at mohela.studentaid.gov – notice the official government website address.
Your loan servicer’s website will also have the “Official Servicer of Federal Student Aid” next to their logo:
Final Thoughts on FTC Cracks Down
Scammers thrive when student loan policies shift, there are potential changes on the horizon, and public communication lags. This is especially true for recent college graduates and borrowers with little experience navigating federal systems.
As repayment programmes continue to evolve, such as the proposed changes under the RAP plan, it’s likely that more fraud attempts will follow. FTC Cracks Down