Massachusetts AG Sues Student Loan Servicer

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On August 23, 2017, Massachusetts Attorney General Maura Healey announced that her office had sued one of the nation’s largest federal student loan servicers, alleging that the servicer deprived public servants of relief under the Public Service Loan Forgiveness Program (PSLF), a federal student loan forgiveness program that forgives loans of borrowers that hold public service positions after making 120 qualifying monthly loan payments. The complaint was filed in Suffolk County Superior Court.

According to the complaint, the loan servicer violated Massachusetts Consumer Protection Act, M.G.L. c. 93A, § 4, and the Consumer Financial Protection Act (CFPA), 12 U.S.C. § 5552(a)(1), by engaging in unfair acts and practices that allegedly deprived borrowers of qualifying loan forgiveness months​ and overcharged borrowers.

Specifically, the complaint alleges that the loan servicer misprocessed borrowers’ applications for Income Driven Repayment plans, which make their monthly payments more affordable; collected amounts not legitimately due and failed to refund them; and failed to properly count borrowers’ qualifying payments.  The complaint alleges that the loan servicer knew or should have known it was committing​ these practices.

According to the complaint, the loan servicer manages over a quarter of the nation’s $1.4 trillion student loan debt on behalf of various lenders for millions of borrowers across the United States, and manages the federal student loan accounts of hundreds of thousands of Massachusetts borrowers with a total outstanding principal balance exceeding $5 billion.

The complaint seeks restitution, injunctive relief, civil penalties and reimbursement of enforcement costs and expenses.

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