It’s not loan forgiveness, but 23,000 borrowers who were reportedly misled by five debt relief companies will soon get checks in the mail to the tune of $19 million.
Around 23,000 student loan borrowers are slated to receive a check in the mail soon. No, not a loan forgiveness check — unfortunately — but a payout from a lawsuit that you may qualify to benefit from. Here’s what you need to know.
The lawsuit was brought by the Consumer Financial Protection Bureau and charged five debt relief companies — Docu Prep Center, Certified Doc Prep Services, Assure Direct Services, Direct Document Solutions, and Secure Preparation Services — with charging consumers with “unlawful advance fees.” The CFPB announced that checks, with a total payout of close to $19 million for 23,000 people affected, would be sent from CFPB contractor Epiq Systems beginning December 12.
The lawsuit accused the five companies of breaking the Consumer Financial Protection Act and the Telemarketing Sales Rule by misleading consumers about services and charging unlawful fees between 2015 and 2017. Lending companies Monster Loans and Lend Tech Loans are also named in the suit for using “illegally obtained” consumer credit information to market debt relief services.
If you believe you were charged unlawful fees or otherwise negatively impacted by the companies listed, contact Epiq Systems at 877-899-2926 or firstname.lastname@example.org.
This action is not related to President Biden’s student debt relief plan, which is currently stalled pending the resolution of two lawsuits challenging the legality of the program. After two federal judges ruled earlier this year that the program is not legal and one issued an injunction, the application and approval process was halted.
The Biden Administration’s sweeping debt forgiveness plan, which would forgive up to $10,000 in student debt per borrower and up to $20,000 for Pell Grant recipients, began as a campaign promise for Biden and represented to many the possibility of escaping from crushing and unfair student loan debt. Since it was announced in August, the plan has received backlash from Republican lawmakers.
Two lawsuits are at the center of the controversy. One of the suits was brought by six conservative states that claim the program will negatively impact state finances by forgiving student loans from which the states gain revenue. The other was brought by two borrowers, backed by a Conservative advocacy group founded by Trump-ally, billionaire Bernie Marcus. The pair claim they could not note their grievances with the program because there was no public Q and A period. Neither of the borrowers would be eligible for forgiveness under the program.
The U.S. Supreme Court has agreed to hear arguments from both lawsuits in February 2023 and plans to issue a decision by June 2023. Until then, tens of millions of student loan borrowers are left in financial limbo, unable to prepare for the future.
To make the wait somewhat more bearable, Biden extended the pandemic-era student loan payment and interest pause. The pause started in March 2020, at the height of the Covid pandemic, and has been extended a number of times since due to a flagging economy and raging inflation. The pause was set to expire on December 31st, but Biden announced earlier this month that it would continue until either June of 2023 or at least 60 days after the Supreme Court announces its decision, whichever happens first.