CPFB fines student loan officer $1,000,000 for misleading borrowers about public service loan forgiveness | Share b.
Student borrowers, facing one of the biggest interest rate hikes in years, are pinning their hopes on student loan forgiveness. As they struggle to make payments over the past few years, many are faced with choices such as delaying marriage, moving to parents’ basements and foregoing retirement savings.
However, a company EdFinancialhas been dealing with student loan accounts for decades and misleading students about their eligibility for programs such as Federal Student Loan Forgivenessas well as Federal Family Loan Education Program loans.
A survey conducted by the Consumer Financial Protection Bureau uncovered numerous instances where the service agent provided inaccurate information or failed to provide complete information regarding the types of programs and payment options that borrowers and their families may be eligible for,
As a result of EdFinancial’s actions, the CFPB charged the company with the following violations of the Consumer Financial Protection Act:
- Distort that FFELP borrowers could not receive the PSLF– Borrowers were led to believe that if they received funds from the Federal Family Education Loan Program, they were not eligible for public service loan forgiveness. They were also deprived of the knowledge that they could consolidate their loans to become eligible if other standards were met.
- Misrepresentation to borrowers that certain jobs were not eligible for PSLF– Many borrowers have been told by EdFinancial that their occupations are not eligible for relief and certain positions have been categorically excluded to deter borrowers from considering PSLF.
- Falsely stating that FFELP borrowers were making payments to PSLF before loan consolidation– The company told borrowers that their FFELP loan payments would count towards the 10-year requirement for monthly payments to receive the PSLF. However, this was false due to the fact that these loans had not been consolidated into direct loans, which is a requirement of the program.
- Describe FFELP borrower rebate programs without mentioning PSLF– EdFinancial representatives did not inform borrowers of their options for receiving the PSLF while on FFELP loans, which directly discouraged borrowers from applying for the program due to perceived lack of qualification.
The CFPB, as a result of its investigations and federal laws protecting student borrowers from predatory or unfair lending practices, fined the company $1 million. The enforcement action also required them to notify those borrowers of the PSLF waiver which expires on October 31, 2022.
The settlement comes in the latest round of lawsuits by the agency, in a crackdown on predatory student loan servicers.