CHICAGO (WLS) --Students claim companies that promised to help them consolidate college loans did not deliver.
Nationwide, student loan debt currently totals over $1 trillion. But the I-Team found that students who are looking for help to consolidate their loans are getting into more trouble and heading deeper into debt.
Wheeling resident Amy Matuga said she got a call from Progress Advocates offering to help with a loan forgiveness program.
"Every kind of thing he could think of to say to me, he said to me," said Amy Matuga.
What she got was a $1,400 fee for a loan consolidation with a 20-percent interest rate.
"The interest rates from the federal government are around six to seven percent and certainly 20-percent is far beyond what you would expect to see on a consolidation loan," said Matt Ribe with the National Foundation for Credit Counseling.
Matuga didn't lose any money and Progress Advocates let out of her contract.
The company has an "F" rating with the Better Business Bureau for six complaints.
The I-Team also found that the company has the same registered LLC agent as Student Advocates and a representative on the phone told the I-Team they're the same company.
Student Advocates also has an "F" with the BBB for 38 complaints.
"I would like to say to this company, I hope you go out of business," said Matuga.
Dawn Harvey of Crystal Lake used the same company. Harvey said she was told there was a one-time fee of $99.
"...[A]nd that was affordable to me and so it sounded good," said Harvey. "They took five payments of $99. I noticed my bank statement and thought what is this? I couldn't contact anyone from this Progress Advocates LLC,"
Harvey also said that not a dent was made in her original loans so she closed her bank account.
"This is $800 to $900 bucks that is gone," said Harvey.
Student loan experts have now warned consumers.
"The way many of these companies position themselves is being able to get you some sort of spectacular deal, some sort of huge forgiveness and it sounds too good to be true, and so that would be a red flag and certainly you don't want to give your bank information to anyone," said Ribe.
The I-Team didn't hear back from either student loan company but their contract advises customers that loan consolidations can be done for free and that their paid service is to handle all the paperwork and applications.
Harvey said the service only put her in more debt.
"I just want my money back," said Harvey.
For advice if you are having trouble with your Federal student loans:
- The government's Federal Student Aid website has information for borrowers.
- There are only a few contracted student loan servers. They are listed on the website and may help borrowers with loan payment problems.
For advice if you are struggling broadly with loans:
- Quality non-profits charge a reasonable fee based on a consumer's ability to pay and sometimes wave fees all together.
- Ask what the value is for any fee that you are asked to pay. Know what you are getting.
- The National Foundation for Credit Counseling's website has free resources for borrowers to access to help them understand their situation.
Better Business Bureau reports:
- Progress Advocates: http://www.bbb.org/losangelessiliconvalley/business-reviews/loan-modification/progress-advocates-group-in-el-segundo-ca-636530
- Student Advocates: http://www.bbb.org/sdoc/business-reviews/debt-relief-services/student-advocates-in-costa-mesa-ca-172016115