FTC Issues $4.1 Million in Refunds: What Student Loan Refund for Scam Victims

The Federal Trade Commission is taking action on student loan refunds because of predatory lending. This guide serves as a vital resource for the 27,584 borrowers finally receiving restitution.

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

Updated on January 17, 2026.

In a landmark victory for consumer protection and student loan borrowers, the Federal Trade Commission (FTC) is distributing over $4.1 million in refunds to victims of debt relief schemes like Mission Hills Federal and Federal Direct Group. These scammers specifically targeted vulnerable borrowers with non-existent loan forgiveness and illegal upfront fees, deceptive practices such as the Telemarketing Sales Rule.

In my law courses, I focus on issues with scams and fraud committed by “debt relief” companies that push borrowers closer to bankruptcy. Below is the breakdown of the current enforcement actions and how to secure your reimbursement.

Which Companies Are Involved?

The FTC’s lawsuit focused on a network of operators, including Mission Hills Federal and Federal Direct Group (also known as Elegant Solutions, Inc.). These entities, along with National Secure Processing and The Student Loan Group, allegedly bilked millions from consumers by:

• Falsely claiming affiliation with the U.S. Department of Education.
• Pocketing monthly “loan payments” instead of forwarding them to the actual loan servicers.
• Charging illegal advance fees for debt relief services.

Vital Stats of the Refund Program

• Total Refund Pool: $4.1 Million
• Total Eligible Borrowers: 27,584
• Average Refund: Approximately $147 per person.
• Administrator: JND Legal Administration.

Professor’s Note: The FTC will never ask you to pay money or provide account information to receive a refund. If someone contacts you demanding a “processing fee” for your refund, it is a secondary scam.

How to Claim Your Refund

If you were a client of these specific groups, you should have received a check in the mail. If you have questions or believe you were overlooked, you can contact the official refund administrator:

• Administrator: JND Legal Administration
• Phone: 1-844-566-0108
• Official FAQ: FTC.gov Refund Page.

The Consequences of Financial Scams: Take Steps to Protect Yourself

For many of the students I work with, these scams did more than just steal a few hundred dollars; they caused borrowers to miss actual payments, leading to defaulted loans and damaged credit scores.

If you have lost money to these schemes and are still struggling with the underlying debt, it may be time to look beyond “relief programs” and toward statutory protections. Whether it’s navigating the transfer of Navient loans to MOHELA or exploring a Chapter 13 filing to manage unmanageable debt, ensure you are taking advice from experienced student loan lawyers rather than unverified third parties.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. Paralegals and students who are buying single copies can do so via Amazon Books. To access my YouTube channel, click this link.

You can learn more about filing for bankruptcy and the bankruptcy petition via this link. Information on the bankruptcy court system, contact information for trustees, and your state’s exemptions can be found here. The federal bankruptcy exemptions are listed here. The latest version of the 341 Meeting of the Creditors can be found here.

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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.

Updates:

• January 31, 2025.
• October 2, 2025.