Information about student debt relief companies

Many consumers have federal student loans issued by the United States Department of Education (“DOE”).   The DOE offers various programs to help consumers with respect to their federal student loans.  Consumers can apply for these programs themselves for free. 

A number of companies solicit consumers with federal student loans offering to help them apply for these DOE programs.  These student loan debt relief companies typically charge consumers more than $1,000 for their services and in many cases require that the consumers pay their large fees by entering into a financing agreement to take out a loan from a financing company.

Information about settlement with Equitable Acceptance Corporation and Debt Resolve Defendants

On September 20, 2018, the New York State Attorney General filed a lawsuit against several student loan debt relief companies, their financing company, and two individuals who were in charge of several of the companies. The lawsuit alleged that these companies and individuals fraudulently, deceptively and illegally advertise, market, offer to sell, sell, and finance student debt relief services to thousands of consumers nationwide, including New Yorkers. The defendants promised to help borrowers apply for various programs offered by the DOE with respect to the borrowers’ federal student loans, which, as explained above, borrowers can do themselves for free. The defendants usually charged consumers more than $1,000 for their services and in most cases required that the consumers pay their large fees by entering into a financing agreement to take out a loan from the financing company defendant, Equitable Acceptance Corporation (“Equitable”).

The other named entity defendants were: Debt Resolve, Inc.; Hutton Ventures, LLC; Progress Advocates, LLC; Progress Advocates Group, LLC; Student Advocates, LLC; Student Advocates Group, LLC; Student Advocates Team, LLC; Student Loan Care, LLC; and Student Loan Support LLC.

On August 12, 2019, the Court approved a Consent Order and Judgment (‘Equitable Consent Order”) agreed to by Equitable and the New York State Attorney General. The Equitable Consent Order ended the lawsuit against Equitable. On June 25, 2020, the Court approved a second Consent Order and Judgment (“Debt Resolve Consent Order”) agreed to by all of the remaining defendants, except Hutton Ventures, LLC, which ended the lawsuit against them.  On March 30, 2021, the Court approved a default judgment against Hutton Ventures, LLC.

You may have received a notice in the mail from Equitable in September 2019. Please see below for answers to some frequently asked questions.

1. Who is Equitable?
   Equitable is a company that provides financing (i.e., loans) for the purchase of student loan debt relief services purchased from other companies. In other words, Equitable loaned you money so that you could pay another company to provide you with debt relief services. You may have seen Equitable’s name on your bank statement, taking money out of your account each month to pay back the loan you had with them.
   
   Equitable is not affiliated with the DOE and is not your student loan servicer. The payments to Equitable did not pay your student loans.
    
2. What are the terms of the two Consent Orders?
   Some of the major terms are:
   • Equitable and the Debt Resolve Defendants are permanently banned from offering student debt relief services or providing loans or financing for any debt relief services to New York consumers, including student debt relief services.
   • As of August 12, 2019, Equitable stopped collecting all debts from New York consumers arising from the purchase of student loan debt relief services in New York. Equitable also cannot sell or assign those debts to anyone else for collection.
   • For relevant New York consumers, Equitable must also take steps to delete the debt from consumers’ credit reports.
   • Equitable must pay New York State $225,000.  The Debt Resolve defendants must pay New York State $250,000
      
3. I got a letter in the mail with a notice that says “Notice of Equitable Acceptance Corporation’s Settlement with the New York Attorney General’s Office.” Is this letter real?
   Yes. Equitable was required to send you the letter as part of the Equitable Consent Order.
    
4. The letter says I don’t owe Equitable any more money. Is this true?
   Yes. Under the Consent Order, Equitable will “forbear” or will no longer collect any amounts you would have owed under your contract after August 12, 2019. The money you owed to Equitable is different than the amounts you pay to your servicer for your student loans. You still must make payments on your student loans.
    
5. I don’t understand the part of the notice where it says I may need to recertify – how do I know whether I have to and what do I have to do?
   It is very important that you find out whether this section applies to you. Whether you need to recertify depends on what type of repayment plan you are currently in. You only need to recertify if you are currently in an income-driven plan. These plans may commonly be referred to as PAYE, REPAYE or IBR.
   • If you need to recertify, you need to recertify every year. The month of your recertification is tied to the date you entered the plan. You must timely recertify your eligibility – otherwise your monthly payments will likely go up.
      
6. Helpful sources of more information about student loans:
   To determine the identity of your loan servicer, log onto https://studentaid.gov/fsa-id/sign-in/landing< or call or call 1-800-433-3243 (TDD: 1-800-730-8913). Your servicer can tell you your type of plan and whether and when you need to recertify.
   • You can visit the U.S. Department of Education’s website for information about repaying their student loans (https://studentloans.gov/).
   • You can also visit the NCLC Student Loan Borrower Assistance Project (https://www.studentloanborrowerassistance.org/
   • or visit the NYAG “Student Loan Repayment and Debt Relief Guide for New Yorkers”  
      
7. Will I get money back from Equitable and the Debt Resolve Defendants? If so, when?
   The Consent Order applies only to New York consumers.
   • If you received a notice in the mail from Equitable about the settlement with the New York Attorney General’s Office you may have been eligible for restitution from Equitable’s $225,000 and the Debt Resolve Defendants $250,000 payments to New York State. You did not need to do anything in order to be eligible for or claim this restitution. The restitution checks were mailed to consumers in September 2020.
      
8. Do the Consent Orders mean I don’t have to pay my student loan?
   No, you still have to pay your student loan. The Consent Orders concerned money you owed Equitable for the debt relief services you purchased from a debt relief services company, not your actual student loan.