The Federal Trade Commission will pay $4.1 million in refunds for thousands of student loan borrowers - are YOU eligible?

Thousands of student loan borrowers will receive a share of $4.1 million in refunds after losing money to debt relief scammers.

Some 27,584 victims will receive a check from the Federal Trade Commission (FTC), the agency announced today. 

A phony student loan relief scheme, which went under a variety of names including Mission Hills Federal and The Student Loan Group, lured in Americans with the promise of affordable repayment plans or forgiving their debts entirely.

Instead, the scammers pocketed their monthly loan payments. 

The FTC filed a complaint against the scheme in 2019, alleging that since 2014 it had tricked students into paying hundreds, or even thousands, of dollars in illegal upfront fees and fake loan payments. 

Some 27,584 victims will receive a check from the Federal Trade Commission (FTC), the agency announced today (Pictured: FTC Chair Lina M. Khan)

On average, each victim should receive a refund of almost $150, but the amounts received will vary. 

According to the complaint filed by the FTC, the operators also tricked vulnerable consumers into sending their monthly student loan payments directly to the scammers by pretending to take over the servicing of their loans.

In reality, few payments were actually applied to consumers' student loans and in many cases, none at all. Instead, they kept consumers' money for themselves. 

The scheme 'preyed' on borrowers by promising to reduce their monthly payments or enrolling them in income-based repayment plans. 

The scammers told victims to stop making payments to their servicers and, instead, to make them directly to them. 

In many cases they arranged for their student loans to go into forbearance, deferment, or zero dollar monthly payment status so lenders would not expect to receive monthly payments nor contact consumers when payments were not received.

According to the FTC complaint, telemarketers lured people in by quoting monthly payments that were half or less than what consumers were paying their loan servicer at the time. 

'For example, one consumer who had been paying $200 per month was told her new monthly payment would be $50; another consumer who had been paying $130 per month was told the new payment would be $61,' it reads.

Once they had handed over their information to the scammers, most or all of their payments to their servicer were not paid.

This meant that many consumers accrued additional interest on their loans.  

Victims who have questions about their refund should visit the FTC website.

The operators also tricked vulnerable consumers into sending their monthly student loan payments directly to the scammers by pretending to take over the servicing of their loans

According to NerdWallet, Americans owe around $1.6 trillion in federal student loan debt. 

President Biden's plan to cancel up to $400 billion in student debt for millions of Americans was struck down by the Supreme Court in June last year. 

But the administration has since used its existing authority to leave Americans with less debt. 

Under the Biden administration, more than 3.7 million borrowers have had their loans canceled, totaling $136.6 billion.