State News

Baldwin doubles down on encouraging crackdown of companies that offer scam student loans

U.S. Sen. Tammy Baldwin, D-Wis., wrote a letter last month to ask the U.S. Department of Education to track down companies that offer faulty student loans.

Image By: Katie Scheidt

U.S. Sen. Tammy Baldwin continued Wednesday to call on the Department of Education to crack down on fraudulent student debt schemes.

12 Democratic senators, including Baldwin, penned a letter to Education Secretary Betsy DeVos last month asking her to take “swift action to address the growing problem of student loan debt relief scams.”

Over the past few months, the Federal Trade Commission launched a law enforcement initiative targeting deceptive student loan debt relief scams. This effort has been deemed the “Game of Loans” by the FTC and takes court action against firms believed to have scammed students.

Cliff Robb, associate professor at the UW-Madison School of Human Ecology, reiterated concern over students being enticed by fraud companies, especially since “the idea of turning down an option that may help is really hard to do” for students that may not understand the complexities of student loan debt.

Robb also voiced his concern over the potential for unscrupulous companies to outpace the rate of FTC crackdown.

“[There is] little cost to create one of these companies,” Robb said. He also noted it’s often difficult to actively track down these type of companies and verify their legitimacy.

The FTC claims they are “working closely with the U.S. Department of Education’s office of federal student aid to raise awareness about student loan debt relief schemes,” according to their website

“The FTC is proud to work with state partners to protect consumers…[and] help them learn how to spot a scam,” said acting FTC chair Maureen Ohlhausen in a statement?.

In addition to reliable resources being available for students in loan debt, Robb stressed the importance for students to “take responsibility with regard to how they’re using the loan, not only in terms of the method of borrowing, but the amount they borrow.” 

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