Washington Attorney General Bob Ferguson is suing Student Loan Processing and owner James Krause for allegedly charging consumers in the state exorbitant and illegal fees to help with their student loan debt.
A lawsuit filed Monday claims the company violated state laws protecting student loan borrowers. It claims SLP illegally charged borrowers $123,000 to help consolidate their federal student loans.
SLP charged 88 consumers an upfront fee of $250, or 1% of their outstanding loan balance, whichever was greater, according to Fergusons office. Some paid up to $2,000, although state law caps initial fees at $25.
SLP also charged a $39 monthly fee for all customers, although the law caps monthly fees at 15% of a borrower's monthly payment. The borrowers owed an average of $58,000 in student loans, according to a statement from the AGs office.
Ferguson wants SLP to void all contracts with Washington borrowers, return all fees, pay the state $2,000 for each legal violation and cover attorneys' costs and fees.
SLP states on its website that it offers to help customers fill out and submit paperwork to the U.S. Department of Education. The government agency offers the same services at no charge. SLP did not immediately return a request for comment.
Alison Dempsey-Hall, a spokeswoman for the AGs office, said a consumer had filed a complaint about SLP but she couldn't confirm whether it prompted an investigation. Dempsey-Hall said SLP has been notified of the lawsuit and has 60 days to respond.
