Kennyhertz Perry’s Braden Perry Weighs In on Student Debt Relief Industry

Kansas City, MO (July15, 2013) – Braden Perry, former federal enforcement attorney, contributed to’s latest article discussing the Student Debt Relief Industry.  The article can be seen in its entirety below or at

America’s student loan bills have outgrown its credit card bills, and the debt relief industry is clamoring for the business of student borrowers. But according to a report from the National Consumer Law Center (NCLC), some companies are ripping off those borrowers by charging hefty fees for programs the federal government offers for free.

The NCLC used a secret shopper to investigate 10 agencies that advertised student loan debt relief. The investigation found numerous problems with the industry, including the widespread misrepresentation of free federal programs as private, for-profit debt solutions. One of the companies in the investigation charged up to $1600 for enrollment in free programs, while another charged $295 with a monthly surcharge of $50.

The report says multiple companies failed to disclose their fees and published misleading information about consolidation, garnishment and bankruptcy. In some instances, the secret shopper was pressured to sign over power of attorney, reveal her federal student loan PIN number and sign arbitration clauses that would limit her legal options. And despite advertisements that described a range of debt relief services, the companies only offered loan consolidation when contacted.

“There were a shocking number of inaccuracies and lack of transparency among the companies in our investigation,” said National Consumer Law Center attorney Deanne Loonin, lead author of the study. “We hope that the U.S. Department of Education will make it easier for student loan borrowers to access its borrower

assistance programs, and that federal and state authorities will ensure that these companies comply with the law so that those consumers truly understand what services they are buying.”

Complex Government Programs

Though the report emphasized the practice of charging borrowers for enrollment in free programs, it didn’t lay all of the blame upon the debt relief industry. It said the surge in debt relief middlemen was made possible because “the government does not have an efficient system for informing borrowers of these programs or of administering them efficiently and according to the law.”

The federal government offers student loan debt consolidation through the Federal Direct Student Loan Program (FDLP), which also offers a variety of subsidized and unsubsidized loans to college-bound students.

“Unfortunately, the [FDLP] process is marred by inexcusably complex procedures to reach approval,” said Kansas City attorney Braden Perry, a former federal enforcement attorney now with Kennyhertz Perry, LLC. “The process for federal consolidation is ordinarily at least 60 days and can go much longer. For the private debt consolidation industry, you can ordinarily sign the papers relatively quickly.”

Choose Wisely

Because student loan debt relief is an emerging industry, student borrowers should be especially thorough in investigating servicers before doing business with them, according to Perry.

“Consumers should look to companies that are transparent in the products,” Perry said. “Ideally, the more information they can provide a consumer upfront, including straightforward fees, terms, and the proper disclosures will allow a consumer to evaluate their options independently and select their choice through informed decision making. Aggressive tactics and the failure to provide the proper consumer information may impair these decisions and create potential financial issues and a severe headache for the consumer.”

The NCLC report recommends that the government intervene in the industry by requiring transparent and reasonable fees, investigating misleading advertisements and prohibiting sales commissions for representatives acting as “debt counselors.”

Perry said that the industry is “at the crossroads” and it can “either tighten up and continue as an fee-based alternative to free federal programs attractive to the proper consumer, or face backlash for the actions that fly in the face of basic consumer rights.”

“The more firms that skirt, or even plow through consumer protection laws and regulations, the more likely consumers will ignore the industry altogether. In the end, for a firm to provide services long-term, they must meet the consumer halfway, transparently informing consumers of their services. Otherwise, a firm will be inundated with complaints and regulatory or criminal investigations.”

About: Founded in 2013, Kennyhertz Perry is a business and litigation law firm representing clients in highly regulated industries.  Founded by two veteran Kansas City lawyers, John Kennyhertz and Braden Perry, Kennyhertz Perry bring a unique mix of top law firm quality expertise, practical experience, and pragmatic business solutions. Learn more at