CFPB enters into a consent order with the Student Loan Service to settle alleged UDAAP breaches in relation to FFELP loans

The CFPB has has entered into a consent order with Edfinancial Services, a student lending service, to settle the Office’s allegations that Edfinancial participated in deceptive acts and practices in breach of the CFPA UDAAP prohibition. The consent order requires Edfinancial to pay a $ 1 million fine.

In line with the Bureau’s findings in the consent order (which Edfinancial neither acknowledges nor denies), Edfinancial committed various falsifications with Federal Family Education Program (FFELP) borrowers regarding their eligibility for Pardon Service (Pardon D). ). Under the PSLF program, established in 2007, student loan borrowers with suitable loans working in public service positions or for some non-profit organizations are eligible to write off a loan if they make 120 eligible payments under a permissible repayment plan. Unless a FFELP borrower is eligible for the limited PSLF exemption announced by the Department of Education in October 2021, which expires on October 31, 2022, FFELP borrowers must consolidate their FFELP loans to be eligible for Direct PSLF and any payments made before consolidating a FFELP Loan into a Direct Loan do not count towards PSLF.

The Bureau’s findings in the consent order identify a number of falsifications made by Edfinancial customer service representatives to FFELP borrowers. Such false statements concerned the eligibility of FFELP borrowers for PSLF, the ability of FFELP borrowers to consolidate their loans if FFELP loan payments were to be included in the PSLF, if certain jobs were eligible for PSF and for FL.

In addition to paying the $ 1 million civil penalty, the consent order requires Edfinancial to take various actions, such as: contacting FFELP borrowers regarding the limited PSLF waiver. Disclosure of some information about the limited waiver of incoming calls from FFELP borrowers and through the interactive voice response system: development and implementation of a call scenario for use by customer service representatives when talking to FFELP borrowers and call tracking program; and updates its website to provide information on the eligibility of FFELP PSLF borrowers.

In response to the CFPB press release on the consent order, Edfinancial issued a statement which included the following:

Edfinancial Services has been providing loan service to our clients, including the US Department of Education, for over 25 years. We were recently ranked No. 1 in the federal student loan service by the Ministry of Education as a result of our commitment to quality. The Office of Consumer Financial Protection examined the loans in our Federal Family Education Loan Program (FFELP) and claimed that our company had cheated or misled some of our borrowers about the suitability of a public service write-off program. . However, in the face of protracted and costly disputes that would distract us from our day-to-day responsibilities to our customers, borrowers and staff, we settled the $ 1 million CFPB case and agreed to update our staff training FFELP loan service.

Simultaneously with the announcement of the CFPB for the consent order, the Ministry of Education sent a letter to FFELP officials, where he described the CFPB settlement with Edfinancial and expressed concern that the issues involved in the settlement are not unique to Edfinancial. The letter reminds service providers that their responsibilities include “actively informing borrowers about available debt relief programs, any changes to those programs, and providing complete information in response to questions and complaints.” In the letter, ED warns that “[Federal Student Aid] and the CFPB is expected to seek further oversight of these issues and every company should make an effort to address them immediately, in order to avoid sanctions or other consequences. “

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