Education

Student debt relief comes with price, and Doral company under scrutiny

Ana Couceiro, a nursing instructor at Barry University, filed a complaint against Student Aid Center, a Doral-based company that touts its services to reduce student loan debt.
Ana Couceiro, a nursing instructor at Barry University, filed a complaint against Student Aid Center, a Doral-based company that touts its services to reduce student loan debt. ctrainor@miamiherald.com

Among the booths advertising healthcare options and encouraging union membership at a new teacher orientation this summer, one company offered “student loan forgiveness for Miami-Dade teachers.”

With brochures styled to look like chalkboards, the Student Aid Center enticed its potential customers: “Qualify for $0.0 monthly payments.”

But the fliers pitching the services of the Doral-based company left out some key information: for starters, potential fees could run up to $1,500 for filling out the same paperwork borrowers can get for free from the federal government. And then there is the fact that company has been the subject of hundreds of consumer complaints and has been hit with a deceptive practices lawsuit by the Minnesota attorney general. The Florida attorney general’s consumer protection division is also reviewing more than a dozen complaints filed against Student Aid Center.

The company is part of a growing industry promising to help deal with escalating student loan debts. The amount of debt nationally is immense — about $1 trillion — and consumer advocates say that makes current and former students prime targets for dubious debt relief operations.

“They are common,” said Deanne Loonin, an attorney with the National Consumer Law Center who wrote a paper on the topic. “It’s a really serious problem, and a growing problem.”

Last year, for instance, Florida and the Consumer Financial Protection Bureau shut down a company called College Education Services which promised to help people with defaulted student loans. The Tampa-based company promised to get borrowers lower payments and collected illegal upfront fees, according to regulators.

Gustavo Lage, an attorney representing Student Aid Center, said the Doral company offers a valuable service for people trying to navigate a complicated process. He compared it to paying for an accountant or lawyer for help with tax returns tax forms or filing for divorce.

“There’s always a certain amount of buyer’s remorse,’’ Lage said. “That doesn’t always mean that a valuable service wasn’t provided to you, and that it wasn’t a necessary service.”

Loonin conceded that the difficulty of applying for the government’s borrower assistance programs and scant help offered by loan servicers has pushed more people to use for-profit companies seeking to ease debt burdens.

They have plenty of customers. Student loans are the second-largest debt held by Americans behind home mortgages, according to a 2013 report by the Federal Reserve. In Florida, where tuition is typically lower, more than half of college students still graduate with debt — averaging about $24,000, according to the Institute for College Access and Success.

The Minnesota suit against Student Aid Center claims the company misled clients with promises to reduce or eliminate debts. It claims that the company kept payments that customers thought were going towards their loans — and even changed passwords on student loan accounts so borrowers could not log on to track their balances. Some clients complained they would up paying late fees or were hit with higher interest rates as a result.

Many of the allegations are echoed in complaints filed by borrowers across the country with the Florida Attorney General.

“We are reviewing the complaints to determine if there are any violations of the Florida Deceptive and Unfair Trade Practices Act,” Whitney Ray, a spokesman for the attorney general, wrote in an email.

Lage, the attorney for Student Aid Center, said many of the people who have filed complaints have gotten their money back. He said borrowers often have multiple loans and a limited understanding of the process, which can lead to disgruntled customers.

“I think that they hear what they want to hear and they don’t completely understand the process and how it works,’’ Lage said.

Besides the Minnesota suit, Student Aid Center faces other legal issues. The company currently faces two lawsuits — one in Fort Lauderdale and one in Philadelphia — that claim the company is violating federal law by making unsolicited calls and texts to potential clients. Student Aid Center already settled a similar suit also filed in Fort Lauderdale federal court.

Despite the legal issues and complaints, the company's social media account on Instagram boasts it has more than 11,000 customers.

The Minnesota lawsuit draws attention to two posts in particular. In one, co-owner Damien Alvarez shared a picture of the SAC sales floor with a caption that references The Wolf of Wall Street – the 2013 film about a high-living stockbroker eventually convicted for defrauding investors by selling them mostly worthless stocks. Another post shows a picture that seems to be of an art installation. The words "let's make lots of money" are scrawled on a wall in black, dripping letters.

“The only people who I’ve heard say money is not important to them is the people who already convinced them selves that they will never have it,” Alvarez wrote on Instragram. “So while you eat TV dinners I’ll eat steaks that cost half your pay check.”

He used shorthand for Student Aid Center to end the post with the hashtags: #sacmoney and #sacmula.

Ana Couceiro, 55, found the company’s pitch initially appealing when she was looking for help with her student debts. The long-time nurse said she took out about $100,000 in loans to return to school at Barry University in Miami Shores in pursuit of a masters degree to help her move into the field of nursing education.

When a new job didn’t pay what she hoped, Couceiro found the Student Aid Center website through an online search. “It said, ‘We can reduce your student loans,’” she said. “It looked like it was through the federal government. It was very legitimate.”

Couceiro said she was about to sign up at a cost of “several hundred dollars” when she told a co-worker about the company.

“She said, ‘Ana, those are services that are available to you for free!’ That was lucky,” Couceiro said. “I didn’t know about those other programs and I thought they were providing me with an incredible service to help with my situation.”

Couceiro filed a complaint against Student Aid Center with the Better Business Bureau, and went through her university and the government to make her loans more manageable. Still, she said, she expects to be paying off her student debt until she retires.

Student Aid Center has since changed its website, which now includes a full page of disclosures — including one that the company isn’t affiliated with any government entity.

In exchange for a $1,300 fee, the Miami-Dade school district allowed company representatives access to teachers at a summer orientation and other events.

Though the Minnesota lawsuit had not yet been filed, there were plenty of complaints posted on the internet about the company and with the Better Business Bureau. But the district did not look into the company’s background.

Iraida Mendez-Cartaya, an associate superintendent who oversees the office that allowed the company to participate in district events, stressed that the district thoroughly screens potential vendors but the Student Aid Center was considered just an “exhibitor.”

“We currently do not vet these companies that are exhibitors,” said Mendez-Cartaya. “We obviously do not condone any kind of behavior that would target employees — or teachers, especially.”

Though the school district has not received any complaints about Student Aid Center, she said the district has decided to no longer let the company participate in events. The school system is also thinking about changing its screening policy regarding exhibitors.

“We are going to look at what other school districts do, what other governmental agencies do, to potentially do a preliminary vetting of these entities,” she said.

Christina Veiga: 305-376-2029, @cveiga

Student loan help

The U.S. Department of Education and student loan servicers offer help for free. Borrowers may qualify for consolidation, deferment or a payment plan that is graduated or income-based. For more information, visit: www.studentaid.ed.gov.

Several consumer groups also offer guidance:

▪ The Consumer Financial Protection Bureau, which worked with the Florida Attorney General last year to shut down one student debt relief scam and sue another company, offers assistance at www.consumerfinance.gov/students.

▪ The National Consumer Law Center has information available at www.studentloanborrowerassistance.org.

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