Governor Cuomo announced that student loan debt relief provider Interactiv Education, LLC (d/b/a Direct Student Aid, Inc., “Direct Student Aid”) will wind down and cease its operations nationwide after an investigation by his Administration’s Student Protection Unit. The Unit, which is run by the Department of Financial Services uncovered that the company engaged in misleading and deceptive advertising, and other improper practices.

“We will not tolerate companies that deceive consumers who are trying to reduce the burden of their student loans – plain and simple,” said Governor Cuomo. “We formed the Student Protection Unit to protect New Yorkers from exploitation and hold loan companies accountable, and today’s action is proof that the Unit is up to the task. Our administration will not hesitate to crack down on groups that break the law.”

Anthony J. Albanese, Acting Superintendent of Financial Services, said, “The actions undertaken by Direct Student Aid and its members took advantage of vulnerable student loan borrowers. The Cuomo Administration’s Student Protection Unit will continue investigating deceptive practices and advocating on behalf of New York’s students.”

Direct Student Aid advertised that it could “reduce” and “lower” its customers’ monthly student loan payments. Direct Student Aid obtained this advertised relief merely by completing applications for Direct Consolidation Loans from the U.S. Department of Education, which are already available free of charge to consumers.

The Student Protection Unit’s investigation found that Direct Student Aid charged more than 400 New York consumers upfront fees ranging from $99 to $3,400 for its advertised student debt relief services in violation of state and federal laws and regulations. The Unit also found that Direct Student Aid failed to adequately disclose to prospective clients that they could complete and submit the same federal student loan consolidation paperwork themselves through the U.S. Department of Education free of charge if they wished to do so.

Direct Student Aid also held itself out as a credit services business and advertised that it could improve its clients’ credit scores. During the period that Direct Student Aid held itself out as a credit services business, it received illegal upfront fees from its New York customers and failed to provide numerous notices and disclosures as required under state and federal laws and regulations. The Department of Financial Services has accepted a penalty of $10,000 from the company under the condition Direct Student Aid will permanently cease all student loan debt relief and credit repair services nationwide.

The investigation and settlement were handled by Student Protection Unit Director Zoe Rasmussen and Supervising Counsel Brian Montgomery under the direction of Executive Deputy Superintendent Joy Feigenbaum and Deputy Director Nancy Ruskin.

To view a copy of the DFS consent order with Direct Student Aid, please visit, link.

As part of his 2014-15 Executive Budget, Governor Cuomo established the new Student Protection Unit within DFS to serve as a consumer watchdog for New York’s students. The Unit is dedicated to investigating potential consumer protection violations and distributing clear information that students can use to help them make smart, long-term financial choices.

Last year, the Student Protection Unit launched an investigation into potential misleading and improper practices at student debt relief companies. Some student loan debt relief companies advertise that they can save consumers a large percentage of their monthly student loan payments. These companies generally obtain lower monthly payments not through their own programs, but by assisting borrowers in completing the paperwork required to consolidate their outstanding student loan debt into a single, new loan issued by the U.S. Department of Education and repay that loan under an income-based plan. These companies can charge hundreds of dollars upfront for their services, when borrowers can access the same debt relief programs that the federal government offers free of charge.

Student loan borrowers do not need to pay to enroll in the many borrower assistance programs that the federal government provides for free. These programs include loan consolidation, income-based repayment plans, and loan forgiveness. The government even provides options to borrowers who have already defaulted, such as loan rehabilitation.

To learn more about your student loan repayment options, you can contact your federal student loan servicer or visit DFS’s online Student Lending Resource Center, the Federal Department of Education or the Consumer Financial Protection Bureau's interactive student loan repayment guide.

Any New Yorker who would like to file a complaint with the Cuomo Administration’s Student Protection Unit about a student debt relief company or other potential abuses can contact the Department of Financial Services Consumer Hotline at (212) 480-6400 or (800) 342-3736 for assistance. The Cuomo Administration's Student Protection Unit has also issued a consumer alert, which can be viewed here, with information on student debt relief companies.