Feds, states cracking down on student loan scams

Federal and state law enforcement took action against 36 alleged student loan scammers that made false promises of debt relief and collected illegal fees in 11 states and the District of Columbia, the Federal Trade Commission said Friday. 

The FTC action, labeled "Operation Game of Loans" and coordinated with state attorneys general, alleges that bogus debt relief firms used "used deception and false promises" to take more than $95 million in illegal upfront fees from consumers over years in Colorado, Florida, Illinois, Kansas, Maryland, North Carolina, North Dakota, Oregon, Pennsylvania, Texas, Washington and the District of Columbia.

The FTC got temporary restraining orders that halted the scams and froze defendants' assets, the agency said.

Student loan debt has passed $1.4 trillion in the U.S. affecting more than 42 million Americans. It's the largest segment of U.S. debt after mortgages. 

The five cases are against a total of 30 defendants, according to the FTC.  Another two pending FTC actions, in which federal courts recently entered "significant" orders, are also included in the operation, the agency said.

The alleged scammers "falsely promised to help reduce or forgive student loan debt burdens, and pretended to be affiliated with the government or loan servicers" violating the FTC's Telemarketing Sales Rule and the FTC Act, the agency said.