Edfinancial Faces Penalties For Lying About Student Loan Forgiveness
Today, the Consumer Financial Protection Bureau (CFPB) sanctioned federal student loan service Edfinancial Services for misleadingly presenting student loan forgiveness options to borrowers. According to the CFPBEdfinancial intentionally misled borrowers from applying for public service loan forgiveness by falsely stating that they were ineligible.
Edfinancial Services accused of alienating eligible borrowers from PSLF
After a tumultuous year in the federal lending space, Edfinancial Services — one of the companies that handles student loan repayment for the federal government — is the latest servicer to be accused of engaging in unfair lending practices. The CFPB says the company intentionally steered Federal Family Education Loan (FFEL) borrowers away from Public Service Loan Remission (PSLF), despite a recent program overhaul that makes many of these borrowers eligible.
The temporary PSLF waiver extends PSLF eligibility to borrowers who consolidate their FFEL loans prior to the October 31, 2022 expiration date. However, Edfinancial representatives did not consider the waiver when assisting FFEL borrowers with their repayment options, and in many cases they intentionally concealed important PSLF information.
Here are the main ways the company misled borrowers.
Misrepresented PSLF eligibility
The CFPB claims that Edfinancial tricked borrowers into believing that their FFEL loans made them ineligible for PSLF – leaving out key information that consolidating FFEL makes them eligible, and sometimes claiming that FFEL loans could not at all be consolidated.
Misrepresented PSLF payment requirements
In order to obtain forgiveness through PSLF, borrowers must make 10 years of qualifying payments on direct loans, including direct consolidation loans. However, Edfinancial led borrowers to believe that payments made on unconsolidated FFEL loans were accounted for in the PSLF.
Eligible PSLF jobs misrepresented
Borrowers pursuing PSLF must work for an eligible government or nonprofit agency while making payments. However, these details were not made clear to the borrowers. “In many cases, Edfinancial has explicitly stated that certain jobs would not be eligible for the PSLF when in fact they were,” the CFPB wrote. When discussing PSLF eligibility, Efinancial also failed to mention all eligible job categories.
Did not mention PSLF when referring to repayment options
Edfinancial representatives often failed to mention the PSLF as a viable rebate program when borrowers researched repayment options, often describing options available only for FFEL loans without considering that these loans could be consolidated to open up more debt. ‘opportunities.
“The company’s statements and omissions left the impression that the PSLF was not an option for many FFELP borrowers,” the statement said. “FFELP borrowers may have chosen not to pursue PSLF because they were unaware of PSLF or did not believe the program applied to them.”
What happens next?
As a result of its findings, the CFPB orders Edfinancial Services to notify all eligible borrowers of the PSLF waiver by the October 31 expiration date. Edfinancial is also required to pay a penalty of $1 million which will go towards the CFPB Civil Sanctions Fund.
If you have been misled by Edfinancial representatives regarding your refund or rebate options, you will be contacted by the servicer with information on how you can qualify for the PSLF.
If you combine your FFEL credits and apply for the limited PSLF waiver before October 31, 2022, all payments you made on your FFEL loans while working for an eligible employer will count towards the PSLF, regardless of the payment plan you were on at the time or if you made the payment on time.
Borrowers who feel aggrieved by their student loan servicer can file a formal complaint with the CFPB through its website at any time.