A company purporting to offer student loan debt relief has been barred from collecting debts by students who purchased its services as part of a legal settlement announced Thursday by Attorney General Letitia James’s office.

The settlement with Equitable Acceptance Corp. stemmed from a September 2018 lawsuit against the company and 11 others that were accused of running a scam that included more than 4,000 New Yorkers that had financed through the Equitable.

The companies were accused of having deceived borrowers, who paid more than $1,000 for a service that is available for free through the federal government.

“Higher education is supposed to be a gateway to prosperity, not a trapdoor to financial ruin,” James said. “Equitable scammed students by offering worthless services that were available at no cost. No longer will Equitable be able to prey on New Yorkers, and they will, instead, be forced to wipe the slate clean and forgive the loans of those it victimized.”

The company will be required to pay back student borrowers $225,000 of the $1.66 million it collected within 60 days. If it fails to do so, the company will be required to pay the remaining judgment in full.

And the company must send a notice to borrowers explaining that their previous debts will be wiped clean.