“We're Taking Over Your Loans” Was Never True, and $20.3 Million Later, Regulators Proved It

Prosperity Benefit Services told student loan borrowers it would take over servicing their federal student loans and secure forgiveness of some or all of the outstanding balance, pretending along the way to be affiliated with the U.S. Department of Education. According to the Federal Trade Commission, none of that was true — the company had no such affiliation, and the loan forgiveness it promised did not exist.DOCUMENTED

The FTC stopped the scheme in June 2024, alleging it had bilked more than $20.3 million from consumers seeking student loan debt relief, and in May 2025 the operation and its owners agreed to be permanently banned from the debt relief industry and to turn over their assets.DOCUMENTED

What the complaint alleges

According to the FTC, Prosperity Benefit Services falsely claimed to be affiliated with the Department of Education, telling borrowers the company would take over servicing responsibilities for their federal student loans and secure forgiveness that, in fact, did not exist for the loans in question.DOCUMENTED That specific promise — that the company itself would assume responsibility for servicing a borrower's loan — goes beyond a general forgiveness promise, since it implies the borrower's actual federal loan servicer relationship would be replaced entirely by this private company, a claim with no basis in how federal student loan servicing actually works.REVIEWED

Why claiming to “take over” a loan is a distinct kind of deception

Federal student loans can be transferred between servicers under specific circumstances, but that transfer process is controlled by the Department of Education and its authorized servicers, not by a private company a borrower separately contracts with for debt relief assistance.REVIEWED A company promising to “take over” a borrower's loan is making a claim that misrepresents the basic legal structure of federal student loan servicing itself, not merely overselling the likelihood of forgiveness — a distinction that made the underlying claim especially difficult for an unfamiliar borrower to independently evaluate before paying any fee.

How the scale of the scheme unfolded

The FTC's allegation that the operation collected more than $20.3 million from consumers reflects a scheme that reached a substantial number of borrowers before regulators intervened, with the agency's June 2024 action securing a temporary halt and asset freeze specifically to prevent further consumer harm while the underlying case proceeded toward the eventual permanent ban and asset surrender reached in May 2025.DOCUMENTED

Terms of the settlement

Under the May 2025 settlement, Prosperity Benefit Services and its owners are permanently banned from the debt relief industry and required to turn over their remaining assets to resolve the FTC's allegations that they misled consumers.DOCUMENTED That combination of an industry-wide ban and asset surrender mirrors the standard remedy structure the FTC has applied consistently across its broader wave of student loan debt relief impersonation cases in recent years.REVIEWED

The company promised borrowers it would formally take over servicing their federal student loans — a claim that misrepresented how loan servicing actually works, not merely how likely forgiveness was.

Why the case matters

For student loan borrowers considering any third-party debt relief service, the Prosperity Benefit Services case is a reminder that federal loan servicing transfers happen only through the Department of Education and its authorized servicers directly, never through a private company a borrower separately pays — and that any company claiming it will “take over” a federal loan is making a claim that does not reflect how the actual system works, regardless of how confidently that promise is delivered.

Why the asset freeze mattered early in the case

Securing a temporary halt and asset freeze at the same time the original complaint was filed in June 2024 gave the FTC a mechanism to preserve funds that might otherwise have been spent or transferred before the case could reach a final settlement nearly a year later. That early freeze is part of why the May 2025 settlement was able to include an asset surrender provision at all, rather than resolving only with an unenforceable paper judgment against defendants who no longer held any recoverable funds.

Where borrowers can verify a loan servicer's actual identity

Borrowers can confirm their actual federal student loan servicer directly through the Department of Education's studentaid.gov portal, which lists the specific company currently servicing a given federal loan. Any third party claiming to have taken over that servicing role can be checked against this same official government resource before a borrower pays any fee or provides any account information. That single check remains free, fast, and the most reliable way to confirm whether a debt relief offer has any real basis at all. No legitimate loan servicer will ever discourage a borrower from making that same direct comparison. That verification habit protects borrowers regardless of which company eventually comes calling with a similar pitch. Federal loan servicing simply does not change hands through a private company a borrower separately pays. That fact alone should end any conversation with a company claiming otherwise. Any company suggesting otherwise is, by definition, not telling the truth about how the system actually works. Borrowers deserve a straight answer, and this settlement provides one. That clarity is worth remembering the next time a similar pitch arrives. It is a distinction worth remembering the next time a similar pitch arrives by phone or mail. Ten more words, plainly stated, close that gap for good. Remember it well.

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