Advertiser Disclosure

Borrower Beware: College Education Services LLC

Loans, Student Loans

This company is on the NerdWallet Student Loan Watch List. The list flags student-loan businesses and individuals hit by enforcement actions, court judgments or liens, or bad ratings from the Better Business Bureau. Learn more in Who Gets Listed. Have you dealt with this business, or encountered a suspicious student-loan company that NerdWallet public interest reporters should investigate? Let us know at watchlist@nerdwallet.com.

College Education Services LLC and its owners were fined $25,000 in 2015 and banned by a federal court from offering any debt-relief service to consumers.

Enforcement actions:

A lawsuit filed by the U.S. Consumer Financial Protection Bureau and the Florida attorney general in 2014 said College Education Services and its executives had violated state and federal laws. It alleged that the company and the executives had:

  • Targeted borrowers who defaulted on student loans or faced garnishment
  • Required borrowers to pay upfront fees before performing any debt-relief service
  • Told borrowers that the company could have their monthly payments lowered, their wage garnishments removed, their loans consolidated and that their credit rating and score could be “dramatically improved”
  • Never provided promised services, including lowering monthly payments, relieving borrowers of default or garnishment, forgiving loans, improving credit scores, or obtaining relief within the promised time frame
  • Did not perform individualized assessments of borrowers’ student loan or financial situation and failed to explain the requirements, benefits and risks of various loan consolidation options available from the federal government

In addition to the company being banned from future student debt consolidation services, the owners were required to notify the CFPB if they start a new business that could be subject to the final judgment or if they file for bankruptcy.

The court judgment said the company must pay the Florida attorney general an additional $10,000 fine and another $15,000 for investigative and attorneys’ fees. But collection of those amounts was deferred.

The judgment said the company and its executives neither admitted or denied any wrongdoing.

Richard Cordray, Consumer Financial Protection Bureau director, said in a 2014 news release that College Education Services and an unrelated company also sued by his agency took advantage of borrowers.

“Student loans are already a significant debt for many Americans,” Cordray said. “College Education Services and Student Loan Processing.US added to that hardship by taking advantage of troubled borrowers and failing to describe their services honestly. When scam artists prey on student loan borrowers, we will take action to halt their illegal activity.”

What the company claimed to provide: Student debt adjustment and credit rating rehabilitation, especially for borrowers who defaulted or faced garnishment

Based: Tampa, Florida

Management: Marcia Elena Vargas, owner, chief financial officer and manager; and Frank Liz, advisor and employee. Vargas previously owned College Defaulted Student Loan LLC.

Sources: U.S. District Court, Middle District of Florida; Florida attorney general; Florida business filings