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Minnesota Attorney General: Loan assistance firm defrauded students

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If you do some digging on the website of Minnesota Attorney General Lori Swanson, you'll see a warning to college students about so-called "Loan Assistance Companies" who charge hundreds or thousands of dollars for something the students can do for free by themselves.

Swanson says this is exactly what the Florida-based Student Aid Center did, according to a new lawsuit filed in Hennepin County on Wednesday, Valley News Live reports.

The station says the company is accused of misleading a number of Minnesotans about its ability to "take over," reduce or eliminate their student debt, and in some cases, charging borrowers up to $1,500 in a "loan forgiveness" scam.

According to MPR News, the attorney general is also alleging that Student Aid Center falsely claimed it could "qualify" students for such forgiveness plans – a call that is made by the U.S. Department of Education.

How the scams work, and what to look out for

The attorney general's office gives a couple of examples of how fraudulent loan assistance companies operate, including the case of "Tracy," who found out that nearly $500 in fees she'd paid to such a firm was never applied to her student debt – despite the fact that she was told the money would count toward her loans.

The finance and debt settlement plans scammers purport to sell access to, the attorney general adds, are in fact free to apply for and are often done through licensed and government-approved companies (you can view a list of them here).

A look at the Better Business Bureau website shows a 'D' grade for Student Aid Center, which the Bureau says is due to 159 complaints against the company, and a failure to resolve the causes underlying a "pattern of complaints."

The business is not BBB-accredited.

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