The Pitch: Debt Relief. The Reality: Borrowers May Pay More.

A growing industry targets people struggling to repay student loans

‘Debt-Relief’ Companies Move In on Student-Loan Borrowers 1

Kristen Schmid for The Chronicle

Rick Cibelli, earning minimum wage and with $10,000 in student-loan debt, signed up with a debt-relief company. After learning that the federal loan-forgiveness program it pitched does not exist, he managed to get the upfront fee back, a step that puts him among the more fortunate clients of the growing businesses.

When Rick Cibelli heard a radio ad last year promising to slash his student-loan payment, he called right away. As a caregiver in a group home for developmentally disabled adults, he was making minimum wage and struggling to repay the $10,000 he’d borrowed for a paralegal certificate more than a decade earlier.

When he called the toll-free number, the sales rep said the company, First American Tax Defense, was a contractor for the Education Department. He said that he could