Blog Enforcement Watch March 31, 2022

CFPB Orders Student-Loan Servicer to Pay $1 Million Penalty and Remedy Miscommunications

On March 30, 2022, the Consumer Financial Protection Bureau (CFPB) announced that it entered into a consent order with a student-loan servicer for alleged deceptive acts and practices in violation of the CFPA, 12 U.S.C. §§ 5531(a), 5536(a)(1)(B).

The CFPB alleged that the servicer made deceptive statements to student loan borrowers and misrepresented their loan forgiveness and repayment options. Specifically, the CFPB alleged the servicer deceived Federal Family Education Loan Program (FFELP) borrowers concerning their eligibility for Public Service Loan Forgiveness (PSLF).  In particular, according to the Bureau, the student-loan servicer incorrectly told FFELP borrowers that they were not eligible for PSLF, could not consolidate their loans, and were making payments toward PSLF before consolidation.  Additionally, the servicer allegedly misled FFELP borrowers by describing loan forgiveness without mentioning PSLF. When borrowers did not specifically ask about PSLF, the servicer made misleading statements and omissions to borrowers, creating the impression that PSLF was not an option for them.

The servicer neither admitted nor denied these alleges, but has agreed to the consent order, which requires the servicer to contact all affected borrowers to provide them with accurate information, engage in compliance monitoring, and pay a $1 million civil penalty.

The post CFPB Orders Student-Loan Servicer to Pay $1 Million Penalty and Remedy Miscommunications appeared first on Consumer Finance Enforcement Watch.