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Beshear: Judge Orders Student Loan Company to Stop Doing Business in Kentucky

Kentucky Attorney General's Office

Attorney General Andy Beshear today announced that a Franklin Circuit Judge has ordered Florida-based Liberty Tax and Student Loan Defense to stop operating in Kentucky.

Beshear said the judge’s order, granted earlier this month, protects Kentucky consumers by preventing the company from soliciting or contacting citizens about student loans, and from entering into contracts or attempting to collect payments from them.

“College has never been more unaffordable, and students are being crushed with debt,” Beshear said. “The Attorney General’s office is focused on ensuring Kentucky’s students are not scammed and are treated fairly. This ruling prevents Liberty from doing business in Kentucky until it complies with our request for documents. This ruling sends a clear message to Liberty and other companies that my office will not tolerate any company hiding from the law. ”

Liberty Tax and Student Loan Defense failed to fully respond to a subpoena issued by Beshear’s Office of Consumer Protection. The Attorney General’s office has an ongoing investigation into the company’s potentially misleading college loan forgiveness claims aimed at Kentucky consumers for large fees.

Students with debt can obtain free loan consolidation, forgiveness and other loan services directly from their federal loan providers, Beshear said.   

The Office of the Attorney General issued a Subpoena and Investigative Demand (SID) on Liberty and its officers last summer. In May, the AG filed its lawsuit in Franklin Circuit Court against the company. In this month’s ruling, the judge ordered the company to turn over all requested documents to Beshear’s office.   

Part of the May lawsuit says Liberty falsely claims it is working with the federal government to offer debt relief services and has collected fees from Kentuckians without providing any debt relief services.

“Students should not agree to pay for services from these types of companies without first contacting their current federal loan servicer who in most cases can offer the same services at no cost,” Beshear said.

There are several warning signs students should look for when receiving calls about debt relief:

·        Beware if a student loan debt relief company contacts you with a high-pressure sales pitch and demands that you sign a contract and pay for services or fees up front, or asks for your personal information or financial account information.

·        Beware if these companies make promises of immediate loan forgiveness, debt cancellation or complete forgiveness after a certain number of payments. Debt relief companies do not have the ability to negotiate with your creditors for “special loan forgiveness” under the federal student loan programs currently in place.

·        Beware if the student debt relief companies ask you to provide your Federal Student Aid PIN number. Your PIN is an ID number issued by the U.S. Department of Education to allow you access to information about your federal student loans and should be kept private.

·        Beware if the company asks you to sign a “power of attorney” or a “third party authorization.” These are written agreements signed by you and the parties giving them legal permission to talk directly to your student loan servicer and make decisions on your behalf.

If students have questions or concerns about repaying student loans, they should contact their service provider directly to discuss repayment options by calling Federal Student Aid at 800-433-3243 or email them.

If students have problems with their student loan servicer or debt collector, they can contact the following agencies for assistance:

·        The Consumer Financial Protection Bureau;

·        The Student Loan Ombudsman of the U.S. Department of Education by calling 877-557-2575.

If students feel that they have been the victim of a student loan debt relief scam, they can submit a complaint to the Attorney General’s office or call 502-696-5300. The AG’s Consumer Protection Office will contact students at the number provided to discuss a complaint and assist them in resolving their concerns.

One of the critical missions of the AG’s Office is to help Kentucky families and seniors recognize and avoid scams.

(story provided by the Kentucky Office of the Attorney General)

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