Over 8,000 student-loan borrowers are getting $10.9 million in payments in the mail after a federal watchdog accused a debt relief company of charging them 'illegal upfront fees'

• The CFPB accused a student-debt relief company, Performance SLC, of illegally charging borrowers fees.
• It reached a settlement that includes $10.9 million in payments to over 8,000 impacted borrowers.
• The company didn't admit any wrongdoing but is no longer allowed to offer debt relief services.

Payments are on the way for thousands of student-loan borrowers who paid a company accused of illegal behavior.

On Thursday, the Consumer Financial Protection Bureau announced that 8,571 student-loan borrowers who were charged by Performance SLC — a California-based debt-relief business — will receive a collective $10.9 million in payments.

In 2020, the CFPB first filed a complaint against Performance over accusations the company charged borrowers about $9.2 million in "illegal upfront fees," according to the press release. The complaint also claimed that the company violated the Consumer Financial Protection Act of 2010 by using misleading tactics to get borrowers to sign up for debt relief services the Education Department offers for free.

For example, the complaint states that Performance partnered with a third-party company to extend loans to borrowers to help them pay a $1,450 fee for the debt-relief services. The loan would appear on borrowers' credit reports, and they were expected to make payments on the loan for three years, "typically in the amount of $40 or $50 per month," the complaint said.

"Some Loan Customers were confused about the loan payments," the complaint said, "believing that the money was going to pay their student debt and that at the end of the three-year term of the loan, their student debt would be forgiven."

Performance never admitted any wrongdoing and agreed to a settlement that bans the company from engaging in any debt relief services going forward. The CFPB said impacted borrowers will begin receiving checks in the mail as of February 15 through RUST Consulting, which works with the agency to distribute funds.

Borrowers with questions related to the case can call 1-888-396-6086 or email Performance_info@rustcfpbcpnsumerprotection.org.

Over the past few years, the CFPB has been getting relief to thousands of borrowers after paying companies for debt relief services that are free of charge with the federal government. In 2022, for example, the CFPB accused five student debt relief companies of charging consumers unnecessary fees, resulting in a total payment amount to consumers of about $19 million.

And in March 2023, the agency accused a company of illegally collecting fees and encouraging borrowers to "stop paying their student loans altogether," leading to $11 million in pay to impacted consumers.

The Education Department has previously warned borrowers to be weary of scams and other types of potentially fraudulent behavior related to federal student loans, and it emphasized that any services related to federal student-loan repayment or relief should not cost the borrower any money.