Suit Accuses Student Loan Servicers of Failing Borrowers

A lawsuit against two major student loan services alleging failure to address borrowers' requests could lead to a financial windfall for the borrowers.

"The CFPB has taken action against a web of investment trusts that failed student loan borrowers, including at the height of the pandemic," CFPB Director Rohit Chopra said in a news release. "Our law enforcement action makes clear that investors cannot sidestep accountability by playing games of corporate musical chairs."

The PHEAA is a public corporation organized under the laws of Pennsylvania, the CFPB said. As of December, the PHEAA serviced a portfolio of student loans worth roughly $17.8 billion. It has been the primary servicing agent for active loans held by the NCSLT since at least 2006. It also claims the PHEAA misrepresented to consumers that certain requests would be answered when the company knew that they would not. The company also failed to inform borrowers that forbearance requests submitted to the NCSLT would not be appropriately processed and that other payment relief options were available. Also, the group claims the PHEAA denied or failed to timely respond to eligible borrower requests for COVID-19-related natural disaster forbearance.

Source: Education Headlines (educationheadlines.net)

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