Student loan borrowers, who face one of the highest interest rate increases in years, are hanging all of 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, relocating to parents' basements, and foregoing retirement savings.
However, one company, EdFinancial, has been servicing student loan accounts for decades and has been misleading students regarding their eligibility for programs such as Federal Student Loan Forgiveness, as well as Federal Family Loan Education Program loans.
An investigation by the Consumer Financial Protection Bureau uncovered numerous instances where the servicer has provided inaccurate or neglected to provide full information regarding the types of programs and payment options that borrowers and their families could qualify for,
As a result of EdFinancial's actions, the CFPB charged the company with the following violations of the Consumer Finacial Protection Act:
- Misrepresenting that FFELP borrowers could not receive PSLF- Borrowers were led to believe that if they received Family Federal Educational Loan Program funds that 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.
- Misrepresenting to borrowers that cetain jobs were ineligible for PSLF- Many borrowers were told by EdFinancial that theri occupations did not qualify for relief and certain positions were categorically excluded to disuade borrowers from considering PSLF.
- Misrepresenting that FFELP borrowers were making payments towards PSLF before loan consolidation- The company told borrowers that their FFELP loan payments would be counted in the 10 year requirement for monthly payments to receive PSLF. However, this was untrue due to the fact that those loans had not been consolidated into Direct Loans, which is a requirement under the program.
- Describing forgiveness programs to FFELP borrowers without mentioning PSLF- EdFinancial representatives did not advise borrowers regarding their options to receive PSLF while on FFELP loans, which directly discouraged borrowers from applying for the program due to the perceived lack of qualification.
The CFPB as a result of their investigations and federal laws protecting student loan borrowers from predatory or unfair lending practices, fined the company $1 milion dollars. The enforcement action also required them to inform those borrwers of the PSLF waiver that expires on October 31st,2022.
The settlement comes as the latest round of lawsuits from the agency, as a crackdown on predatory student loan servicers.