FTC Halts $8.8M Student Loan Debt Relief Scam: What Subprime Lenders Need to Watch Now

The Federal Trade Commission has put a halt to a company that promised student loan borrowers phony debt relief in exchange for upfront monthly fees as high as $1,400.

The FTC has obtained a temporary restraining order against NERD Solutions Inc., ED REF Inc., and their operators Natalie Rodriguez and Pablo Ortiz. The complaint alleges that since at least February 2022, the defendants illegally marketed student loan debt relief services. 

The defendants reached student borrowers, thousands of whom are on the National Do Not Call list, by cold-calling them. They also pretended to be affiliated with the U.S. Department of Education or the borrowers student loan servicers.

Phony Claims of Student Loan Forgiveness

According to the complaint, the defendants used false claims of student loan forgiveness to trick student loan borrowers into paying upfront monthly fees of up to $1,400. The operators of the scheme collected an estimated $8.8 million from student loan borrowers. 

The defendants are charged with violating the FTC Act, the Telemarketing Sales Rule, the Impersonation Rule, and the Gramm-Leach-Bliley Act.

The complaint calls for the freezing of the defendants’ assets, disabling their websites, and permitting the FTC immediate access to the defendants’ business premises. 

How to Spot a Student Loan Debt Relief Scam

According to Federal Student Aid, phony loan forgiveness and other debt relief scams geared toward student loan borrowers use aggressive and urgent language when advertising their services. And they often ask for money upfront for services they won’t provide. 

For example, promising immediate and total student loan debt cancellation is a sign of a scam. Asking for student loan account information, such as user name and password, is another red flag. Typos and grammatical errors are other signs that a debt relief offer may not be on the up and up.

Not sure about a student loan forgiveness offer? Check with the Better Business Bureau to see if the company has had complaints filed against them. 

Student Borrowers Under Pressure

In the fourth quarter of 2025, student loan balances grew by $11 billion to $1.66 trillion, according to the Federal Reserve Bank of New York.

The 90-day delinquency rate on student loans stands at 9.6% of balances. So nearly 1 in 10 student loan borrowers are 90 or more days late on their payments. That’s a lot of pressure to catch up on payments. And some students are unable to catch up and move to default instead.

About 1 million student loan borrowers who were 120 days or more past due on their student loans had those loans transferred to the Default Resolution Group in the U.S. Department of Education. 

Borrowers of any standing with their student loans should reach out to lenders with repayment questions, concerns, or difficulties. Maintaining a good relationship is good for both parties and can make a difficult situation easier to manage when money is tight .

The Bottom Line

The FTC has obtained a temporary restraining order for a company that allegedly provided phony debt relief services to student loan borrowers. The company collected an estimated $8.8 million from borrowers for services it did not provide. As part of the scheme, borrowers paid up to $1,400 in upfront monthly fees.

Student loan borrowers are feeling the pressure to make payments, and some are falling behind. Nearly 1 in 10 student loan borrowers are 90 or more days late on their payments. About 1 million student loan borrowers who were 120 days or more past due on their student loans had those loans transferred to default.