Illinois Attorney General Lisa Madigan filed lawsuits Monday against two student loan servicers, alleging the unlicensed companies imposed illegal fees on delinquent student loan borrowers and deceptively marketed debt solutions.

First American Tax Defense in Chicago and Broadsword Student Advantage in Frisco, Texas advertised debt forgiveness programs that charged up to $1,200 in upfront fees, including help with enrolling in a fake "Obama forgiveness program" and for government services that already are free, according to Madigan. The firms allegedly also falsely identified themselves as being affiliated with the U.S. Department of Education.

The lawsuits state that First American and Broadsword Student Advantage advertised heavily on the radio in Chicago and elsewhere in the state, offering consumers options to help with their debts based on the companies’ alleged expertise and link to the Education Department. The companies offered to cut student loan payments in half or eliminate them.

The lawsuits allege the companies violated the Illinois Consumer Fraud and Deceptive Business Practices Act, the Credit Services Organizations Act and the Debt Settlement Consumer Protection Act. Madigan in 2010, according to Collections & Credit Risk, crafted and helped pass the Debt Settlement Consumer Protection Act to ban companies from charging upfront fees to consumers for help with debt relief. The lawsuits allege the companies are not complying with the requirements of the Debt Settlement Consumer Protection Act and are not providing any help to reduce consumers’ student loan debt.

"These companies illegally charge fees for services that student loan borrowers can obtain themselves through government programs at no cost," Madigan said in a news release Monday.

Officials with the companies could not immediately be reached for comment.

Student loan debt levels have grown to historic proportions. Nearly 40 million Americans carry $1.2 trillion in outstanding student loan debt, according to government figures.

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