When Vanessa WIlliams, a 23-year-old State University of New York grad, was offered “loan forgiveness” by a company called SLF Center, she may have thought her $21,000 in student loan debt was going to be, well, forgiven.
That’s not what happened.
What SLF calls “loan forgiveness” is actually loan consolidation. All of Williams’ student loans were rolled together into one mega-loan – which she would still have to pay -- and her interest rate went up, to boot.
The same thing happened to Kory Turner, a 31-year-old Montclair State grad, when he opted for loan forgiveness from Integra. Instead of letting him off the hook on his $80,000 in student loans, Integra signed him up for temporary forbearance. That just means he didn’t have to make payments for a while, and his interest continued to soar in the meantime.
Both Turner and Williams paid up to get some relief from their student loans, and instead, they ended up owing more. And the kicker is this: They didn’t have to pay Integra or SLF for any of this stuff. The United States Department of Education offers the same service for free.
Williams and Turner are two of 60,000 or so borrowers in a class action lawsuit against SLF, Integra, and the alleged “mastermind” behind this bait-and-switch: Equitable Acceptance Corporation, a finance company based in Minnetonka.
According to the complaint, Equitable has been working with these companies and something like 40 others to schill $1,300 “loan forgiveness” programs that usually end up putting the borrower in a worse spot than they were in to begin with -- along with a new interest rate of about 21 percent.
The borrowers end up paying hundreds more than they would have, all for programs that are available elsewhere for free.
Equitable didn’t respond to interview requests, but Daniel Hill, Equitable’s general counsel, told NerdWallet that accusations of “masterminding” a scheme against vulnerable young adults already drowning in student loan debt were “just nonsense.”
Be that as it may, a lot of people seem to think there’s something rotten about how Equitable does business. It’s currently under investigation by the Federal Trade Commission, and a litany of borrowers have submitted complaints about the company with the Better Business Bureau and the Consumer Finance Protection Bureau:
“I was scammed by Equitable Acceptance last year,” one reads. “They lied like they were a loan forgiveness company but that’s far from the truth… my loans have not been forgiven and they keep trying to collect…”
“Equitable Acceptance posed to be working with the U.S. Department of Education to consolidate my student loans… the U.S. Department of Education has informed me that they do not work with [them.]”
“Mistakenly, I thought [a company] was related to my current lender… and that’s not the case. [The company] misrepresented their selves and did not disclosed [sic] that their finance company is Equitable Acceptance.”
Meanwhile, the New York Legal Assistance Group, which is representing the Williamses and Turners of the world in this suit, is still taking calls from borrowers who think they may have been duped. Their hotline number is 212-659-6165.