Polly Williams, a single mother who had lost her job, was desperate to lower payments on her $23,000 in student loans. Last June, she called one of the companies advertising debt relief online.
For $250, the University of One, now known as Student Consulting Group, offered to help. To come up with the money, Williams skipped an electric bill and lost power, forcing her to throw out $150 worth of food, she said.
She could have avoided the fee, because the government offers borrower assistance programs for free. Still, a growing student-loan debt-relief industry is profiting from consumers’ confusion and desperation, charging as much as $1,600 to sign them up for repayment plans, according to a report that was to be released Wednesday by the Boston-based National Consumer Law Center, a nonprofit advocacy and research group.
‘‘It’s disgusting, it really is,’’ said Williams, 54, who earns $26,000 a year in Cleveland. ‘‘I can only imagine how many other people they are taking advantage of.’’
Borrowers are buckling under the weight of student loans, which total $1 trillion, exceeding all other consumer debt aside from mortgages. Former students are also struggling to navigate the government’s often complicated aid programs. Student loans are among the most onerous forms of debt because they can rarely be canceled through bankruptcy.
Student-loan debt-relief companies say they are comparable to organizations that help taxpayers file their tax returns — something customers can also do for free.
Williams, who filed a Better Business Bureau complaint, said the company charged her but didn’t come up with a better payment plan. On her own, she got in touch with a debt-collection company working for the Education Department, she said, and spent 10 minutes filling out forms to sign up for a new plan, which cut her monthly outlays to $8 from $136.
Student Consulting Group disputes her account, saying her lower payments resulted directly from its efforts.
The government has an array of free programs. Former students can temporarily stop payments or make smaller ones because of hardships, such as a job loss. Borrowers can sign up for plans that tie payments to their incomes and family size. In some cases, over time, loans can be forgiven. Former students can consolidate loans into a single debt with one payment.
Consumers often find it difficult to sign up for the government programs because they are ‘‘unnecessarily complex,’’ according to the National Consumer Law Center’s report.
Companies take advantage of and mischaracterize government programs as their own, said Deanne Loonin, a law center attorney and author of the report, which calls for stepped-up federal and state regulatory enforcement.
The Consumer Financial Protection Bureau has heard from borrowers who say that companies are marketing plans that can save thousands, said Rohit Chopra, the agency’s student-loan ombudsman.
‘‘It is not a special deal,’’ Chopra said. ‘‘It’s often a program they are entitled to by law.’’
The law center report cites the website of a company called Student Loan Relief, based in Dallas, which says it has ‘‘developed programs that will assist nearly every one of the 40 million Americans that currently carry student loan debt.’’
The company said it charges no more than $46 for its services, and nothing upfront, and plans to become a nonprofit.
To investigate student debt-relief companies, the National Consumer Law Center called 10 of them in March, posing as a borrower with $30,000 in loans. It reviewed their websites and 10 others as well as contracts and online complaints.
Representatives of various companies told the law center that upfront fees to put consumers into a repayment plan could be as much as $1,600. In some cases, they said they charged $20 to $50 a month, a practice the center called suspect because income-based plans require only the filing of annual paperwork about eligibility.
The law center found that websites often provided inaccurate information about government programs.
They also made what the center said were suspect claims such as ‘‘guaranteed results’’ within four to six weeks and posted what it said were undocumented satisfaction-rate claims as high as 97.5 percent.
‘‘Many borrowers trying to get ahead through education end up with nothing but mountains of debt,’’ Loonin wrote in the center’s report.
‘‘Their problems only get worse when unscrupulous businesses take advantage of them.’’