CFPB Sanctions Student Loan Servicer for Misleading Borrowers About Loan Forgiveness

  • The CFPB sanctioned student loan servicing company Edfinancial Services, LLC for allegedly making deceptive statements and misrepresenting the eligibility of student loan borrowers for loan forgiveness under the Public Service Loan Forgiveness waiver program in violation of the Consumer Financial Protection Act.
  • According to the Consent Order, Edfinancial allegedly misled student loan borrowers with loans under the Federal Family Education Loan Program about their loans’ eligibility for the PSLF program, which offers debt relief to borrowers employed by the government or an eligible nonprofit who make 120 payments on a qualifying student loan under a permissible repayment plan. FFELP borrowers must consolidate their loans into Direct Loans to be eligible for PSLF.
  • The CFPB alleged that Edfinancial misrepresented that FFELP borrowers were ineligible to receive PSLF or that certain jobs did not qualify for relief. Edfinancial also allegedly failed to inform some borrowers of the PSLF program’s existence and misled FFELP borrowers to falsely believe that they were already making payments towards PSLF before they had consolidated their loans into the Direct Loans program.
  • Under the terms of the Consent Order, Edfinancial is prohibited from engaging in deceptive practices, and must remit to the CFPB a monetary penalty of $1 million. The company must also create and implement a plan for training programs, materials and processes to ensure accurate dissemination about PSLF to eligible borrowers, develop call monitoring programs, and update their online information. The company must also notify and follow up with all FFELP customers about the PFLF program’s limited waiver before it expires on October 31, 2022.