Student Aid Institute, Inc., a California based company, is facing stiff penalties from the Consumer Financial Protection Bureau for some shady business practices.

The CFPB faults the debt services company for deceiving student loan debtors. The Student Aid Institute and its Chief Executive Officer Steven Lamont are accused of claiming to be affiliated with the Department of Education and tricking borrowers into paying fees for federal loan benefits.

According to CFPB the company advertised debt relief services to struggling borrowers and deceived them about the benefits of their services. They convinced them to pay fees in order to participate in federal student loan programs, when in fact the services are free.

The company is being required to shut down debt relief operations, cancel all contracts with consumers and ensure student loan borrowers do not miss important repayment benefits. The must also pay a penalty of $50,000 to the CFPB’s Civil Penalty Fund.

Better Business Bureau Northwest encourages students to explore the U.S. Department of Education website, studentaid.ed.gov, to learn more about student loan debt.

When looking to ease student debt, borrowers should remember the following:

• Never pay an upfront fee for student loan services, including loan counseling and consolidation. Federal law prohibits upfront fees for assistance with consumer debt.
• Understand your repayment options, which may include lower payments based on your income.

Private and federal student loans cannot be consolidated or refinanced together. For private student loans, contact your loan servicer directly to discuss if refinancing could reduce your monthly payments.

Customers of Student Aid Institute should contact their student loan services as soon as possible to ensure they are enrolled in the proper repayment plan. For anyone unsure which loan agency is handling their debt, please call the Department of Education at 800-4-FEDAID (433-3243) for more information.

For the latest information on student finances visit www.consumerfinance.gov/students.