Spotlight on Student Loans:
Penalties For Student Loan Servicers “Breaking the Law”
Finally Some Justice for PSLF
Public Service Loan Forgiveness was promised as a way out of debt for those who got their college degree, then put it to use for the public good by serving their communities. For years, its reputation has suffered due to a low success rate, but the federal government now seems to be taking things seriously enough to do something about it.
We’ve long known that PSLF and the student loan repayment system, in general, have suffered from delinquent and misleading guidance by loan servicing companies. Report after report has found them guilty of misleading borrowers, failing to provide timely information, and, sometimes, downright not knowing what they were doing.
In fact, a recent article by NPR finds that even the government may have known about the extent of servicer failures even earlier, but failed to make them known to the public.
Servicer Fined After Misleading Student Loan Borrowers
After years of shirking responsibilities, misleading their clients, and netting enormous profits, student loan servicers are finally under the magnifying glass and are facing public scrutiny. Some of the largest servicers, including PHEAA/FedLoan and Navient, are exiting the federal student loan business after being threatened with stricter government oversight.
Most recently, a smaller servicer—Edfinancial Services—has been fined by the Consumer Financial Protection Bureau for “making deceptive statements to student loan borrowers and misrepresenting their forgiveness and repayment options to them,” especially those borrowers with FFEL loans.
When Navigate testified in front of the Dept. of Ed. last year, we identified a lack of servicer accountability as one of the core weaknesses of PSLF. Now, we’re seeing the government take real action against servicer malfeasance. We hope this is just the first step. #Onwards.
If you’re pursuing Public Service Loan Forgiveness and you haven’t met with us yet, schedule your free 15-minute Discovery Session to find out if you qualify for PSLF, or what you can do if you don’t.