Masquerading as legitimate help are companies that target forty-four million borrowers owing over $1.6 trillion in student loan debt. “Relief” companies purport to help borrowers struggling to repay student loans but, in fact, inflict irreversible financial harm by charging borrowers unlawful fees. Often pretending to be affiliated with the U.S. Department of Education (Education Department), relief companies falsely claim they can enroll borrowers into income-driven repayment plans and forgiveness programs. Exploiting twenty-first century technologies, relief companies can now easily reach millions of borrowers by, for example, making robocalls to cellphones, posting phony five-star reviews on social media, and requiring borrowers to e-sign documents disclosing their financial information. One company alone bilked student loan borrowers out of thirty-five million dollars in unlawful fees for bogus relief.

This Article addresses the federal response to widespread fraud by relief companies. Borrowers can theoretically obtain free help from private companies called “loan servicers,” which are authorized by the Education Department to assist borrowers with repayment options. However, under new leadership since 2017, the Education Department has taken steps to shield loan servicers from being held accountable for alleged unlawful servicing practices. Similarly, the Bureau of Consumer Financial Protection (CFPB) has implemented several harmful changes, including closing the only federal office dedicated to assisting student loan borrowers. In light of harmful actions taken by the CFPB and the Education Department, this Article proposes that states establish ombudsmen to effectively advocate for borrowers and eliminate their susceptibility to relief companies falsely promising to help. This Article also proposes that Congress require the Education Department to implement existing technology-based solutions to prevent relief companies from taking over borrowers’ online loan accounts to conceal their fraudulent activities.