In February 2014 Kim Kotary was living in Queens, N.Y., working 25 hours a week in three part-time jobs at nonprofits and as a freelance crafts teacher and designer, and worrying how she’d ever pay off the $20,000 she borrowed to earn a master’s from New York’s Fashion Institute of Technology back in 2002. So when she heard a radio ad offering information about how those working for nonprofits could get student debt forgiven, she called the 800 number. A phone rep told her Broadsword Student Advantage could get her monthly payments suspended, based on her poverty-level income, and help her apply to get her debt forgiven after ten years.
Kotary agreed to pay Broadsword $500 and signed its forms online, without, she admits, reading them closely. On top of the $500, Affordable Life Plans, a Securities & Exchange Commission-registered investment advisor, started taking $29.95 a month from her bank account. Then, last August, Kotary lost her main part-time nonprofit gig. Finally, this past March, after 13 months of paying, she discovered she wouldn’t be eligible for the debt forgiveness unless she worked 30 hours a week in the not-for-profit sector, and that she could have applied for forgiveness herself, for free, at www.studentloans.gov. “When I found out it was free, it really pissed me off,” says Kotary, 43, who has stopped the monthly payments. “I was told that they could help me save more than they charged me for the services.”
Arguably, she got off cheap–Affordable Life typically charges $49.99 a month, according to a lawsuit the Illinois Attorney General filed last year charging Broadsword with fraud and with using Affordable, a sister company, to charge fees that would otherwise be barred by Illinois’ Debt Settlement Act. In Court papers Broadsword denies wrongdoing and says that it was simply soliciting business for Affordable, which as an SEC-registered advisor is exempt from the state’s debt settlement law.
By John F. Wasik
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