Consumer Finance Insights
February 11, 2021

Massachusetts AG Settles Claims Against Federal Student Loan Servicer

On February 10, 2021, the Massachusetts Attorney General (Massachusetts AG) announced that it reached a settlement with a national federal student loan servicer, resolving allegations that the entity engaged in deceptive acts or practices in violation of state law related to its student loan servicing practices.  In particular, the Massachusetts​ AG alleged that the servicer (1) misrepresented to borrowers the eligibility requirements of the Public Service Loan Forgiveness (PSLF) program, (2) wrongfully caused participants in the Teacher Education Assistance for College and Higher Education (TEACH) program to convert their grants to loans, (3) prevented borrowers from timely obtaining Income Driven Repayment (IDR) plans, and (4) overcharged borrowers in monthly billing statements.  Prior to executing the settlement, the servicer had already resolved the Massachusetts AG’s claim related to claims that it overcharged borrowers by refunding the affected borrowers and enacting new policies to address the issue.

The Massachusetts AG’s remaining claims were resolved by the settlement which requires that the servicer provide Massachusetts borrowers with the opportunity to submit a claim for account review.  If, upon review, the servicer finds that a error or misrepresentation occurred, the servicer must remediate the issue for the borrower.  Additionally, the servicer must repay teachers whose financial grants under the TEACH grant program were erroneously converted to loans.

The post Massachusetts AG Settles Claims Against Federal Student Loan Servicer appeared first on Consumer Finance Insights (CFI).