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FTC Issues $4.1 Million in Refunds to Student Debt Fraud Victims

S.J. Steinhardt
Published Date:
Mar 14, 2024

The Federal Trade Commission (FTC) announced that it is refunding $4.1 million to 27,584 consumers who fell victim to student debt forgiveness scams, CNBC reported.

The scammers, using names such as Mission Hills Federal, Federal Direct Group, National Secure Processing, and The Student Loan Group, lured the debtors with fake loan forgiveness claims and took their money. The FTC filed a complaint against the operators of Mission Hills Federal and Federal Direct Group in 2019, alleging that the organizations have been tricking student loan borrowers out of their money since 2014.

The operators “tricked students into paying hundreds to thousands of dollars in illegal upfront fees and pretended to lower consumers’ monthly student loan payments,” the FTC said in an announcement. They “also tricked consumers into sending their monthly student loan payments directly to the defendants by falsely claiming to take over the servicing of the consumers’ loans. In reality, few payments were actually applied to consumers’ student loans and in many cases, none at all. Instead, the defendants kept consumers’ money for themselves.”

The FTC has previously refunded consumers for these kinds of scams, CNBC reported. In August 2023, the agency and the U.S. Department of Justice sent $9 million in refunds to victims of an organization known as Ameritech Financial that operated a similar student debt relief scheme. The FTC also refunded 37,800 consumers in June 2023 as a result of another student loan relief scam.

To avoid being defrauded by such schemes, CNBC recommended that student loan borrowers learn the signs of a scam. They include:

● A company or person urging a borrower to “act immediately” or “call now to verify.” The U.S. Department of Education may contact a borrower about “temporary programs,” the Federal Student Aid (FSA) website says, but it won’t use such aggressive language.

● A company or person asking a borrower to pay a small fee in order to have the debt completely discharged. A borrower does not have to pay for any of the existing loan forgiveness programs, although such programs often require years of qualifying payments or certain types of employment. 

●A company or person asking for personal information, including an account password. The FSA will contact borrowers only from one of its known email addresses:;; or Borrowers should also double check URLs and email addresses to make sure that they’re getting information from a reliable source.

Debt relief services exist for people with federal student loans, with a number of protections in place for those struggling to make their payments.