DEGREE OF DEBT: Predatory practices impact debt-consolidating st - FOX 8 WVUE New Orleans News, Weather, Sports, Social

DEGREE OF DEBT: Predatory practices impact debt-consolidating students

BATON ROUGE, LA (WVUE) -

A businessman promising to help people with hefty student loans refuses to answer our questions; a Tulane law professor says he's committing fraud.

“Thank you for calling Student Loan Relief, the nation's largest provider of alumni financial aid packages,” an automated phone message begins. “If you know your party's extension, you may enter it at any time.”

Jordan Smith makes this call daily. The elevator music usually lasts a few minutes until he finally gets an answer.

“Thank you for calling Student Loan Relief, America's leading company for student loan consolidation, reduction and forgiveness,” an operator says. “My name is Jackie.   Are you a first-time caller or an existing client?”

“Hi Jackie, I'm an existing client,” Smith responds.

For five years, he's been an existing client of Student Loan Relief, LLC, a Dallas-based company which says it offers an affordable way to make federal student loan debt easier.

Smith says, “My friend was working for them and he called me and said, ‘hey, I know you have student loans and I know you're probably struggling to pay them, back like everybody else is. It's a legit program. Here is the information on it. Look into it.'  And at the time it seemed really good.”

Smith graduated from Northwestern State in Natchitoches with $20,000 of debt.

“You have no clue where you're going to go, how you're going to pay it back,” he says. “Out to the wolves.”

The company promised to lower his interest rate from the high four's to the mid three's.

“They drafted out of my account every month and I didn't have to think twice about it,” Smith says.

Each month the company promised to take money out of his checking account to help pay off his loan.  Until, that is, Smith tried to buy a home.

“I was in process of buying a house and they pulled my credit a couple of months ago and everything looked fine,” he recalls. “And then they pulled it again last month, and my loan officer called and said, ‘hey, why aren't you paying your student loans anymore?' and I said, ‘I am, they just draft it out of my account. And she said they hadn't paid in 136 days.”

Smith had no clue. “I couldn't even log into my own account,” he says. “And I had to change all that to get it back to me, because even the correspondence saying I was late was going to their office, not to my house.”

The company that promises peace of mind stopped paying off his loan.

“They were drafting money out of my account but not paying the federal loan servicer or whatever, whatever contract they had with them to keep my loans out of default,” Smith says.

Tulane law professor Joel Friedman says, if the allegation is true, “This is a crime. This is fraud. This is stealing. This is using, making promises about the use of funds, which you had no intention of following through on, and which you didn't follow through on.”

The Better Business Bureau gives Student Loan Relief an F rating.

We sent a FedEx letter to the company's business address in Dallas, requesting an interview with owner Jason Spencer. Two delivery attempts failed. So, we mailed our letter to his house.  Spencer signed for the package but never responded to our request.

Josh Hudson also signed up with Student Loan Relief, LLC.  He has $62,000 in student loans from ITT Tech, which shut down earlier this year.  Hudson's tried to get in touch with the company to see if his loan can be forgiven.

“It makes me feel like I'm being used, like they're just… like I'm being conned,” he tells us. “They're taking my money but I'm not getting any service for it.”

For Hudson, weeks have gone by with no returned calls. He cut off the company's access to his loan account.

“I'm trying to wait it out,” he says. “I changed my information on my FSA accounts, so they can't access my account anymore. So, I'm kind of trying to provoke them to actually get in touch with me.  And they haven't yet.”

“I'm livid,” Smith says.

For now, Student Loan Relief, LLC has cost Jordan Smith that house. He's still renting, and he says he won't be able to buy until his credit rating recovers.

“My credit dropped about 80 points,” he tells us.

With Student Loan Relief, he paid $50 a month; now his payments have skyrocketed to $250.

“Now that I'm looking back on it, I'm not really sure what they did to help me out,” he admits.

Because of interest, his original loan of $24,000 is now $30,000. That's “seven grand of interest that I could have been paying on the past seven years,” he says.

That phone call went like every other Smith has made.

“I was promised a call back this morning at 10 am,” he tells the operator, “and every day for the past four weeks. I've been calling you guys and I still haven't gotten a call back. Is there something else we can do?”

The company rep had few answers. “Unfortunately, sir, I'm very sorry but I don't have another number that I can give you,” she says. “The only option that I have here in this department would be to create a ticket.  I understand that you have been calling and there hasn't been a response.  But I'm sorry, I don't have another number that I can give you.”

Jordan was left frustrated, once again.

“Can you tell me why the loan specialists aren't paying it back?” he asks her. 

“No, sir, we're actually the new client department line,” she responds. “I don't have access to you and I don't know why they haven't been returning your calls here. I'm so sorry.”

Jordan thinks the government needs to shut Student Loan Relief, LLC down. “They shouldn't be doing business anymore,” he says.

In the company's YouTube commercial, CEO Jason Spencer asks potential clients to let his company be their expert, their guide through student debt.

“When you truly need relief from your student loans, in some way, shape or form, I can virtually guarantee that we can help you,” Spencer says on camera.

It's a guarantee that some Louisianans say he regularly breaks.

Student Loan Relief, LLC has a .us web address, leading some people to believe it's affiliated with the government. But, as it disclaims on its website, it is “a private company not affiliated with the Department of Education or the Federal Government”.

Copyright 2016 WVUE. All rights reserved.

Powered by Frankly