washington d.c. – Today, the Consumer Financial Protection Bureau (CFPB) issued a bulletin detailing the obligation of student loan servicers to stop illegal behavior regarding borrower eligibility and benefits under the loan waiver. public service loan waiver (PSLF). The bulletin recommends steps service agents should consider taking to ensure that they do not misrepresent borrower eligibility or make misleading statements to borrowers about the PSLF program and the waiver.
“Illegal conduct by a student loan officer can be ruinous for borrowers who miss the opportunity to cancel their debt,” CFPB Director Rohit Chopra said. “We will work closely with the U.S. Department of Education to ensure that public service loan forgiveness pledges are honored.”
“We want to make sure that every borrower who could qualify for the PSLF waiver has the opportunity to do so, and giving borrowers accurate and timely information about their eligibility is critical,” the U.S. Secretary of Education said. Miguel Cardona. “I appreciate the CFPB’s partnership in holding managers accountable for their role in helping borrowers access loan forgiveness under the PSLF.”
Student loan servicers are companies that service student loan accounts. Student borrowers generally do not have the power to choose their manager.
In 2007, Congress enacted legislation providing loan forgiveness for borrowers working in eligible public service employment. For public service employees with direct loans, PSLF cancels the remaining balance on these loans after making 120 loan payments while working for an eligible employer. Despite a government estimate that 1.3 million borrowers are eligible for PSLF, the CFPB has documented how poor service practices have prevented many borrowers from progressing to relief, for example by giving them inaccurate information on how they can become eligible for debt cancellation.
Through its oversight of student loan servicers, the CFPB found that servicers made misleading claims to borrowers about their ability to become PSLF eligible. When managers fail to provide accurate and complete information, they mislead borrowers about their ability to qualify for PSLF, which can result in tens of thousands of dollars in loan repayments that should have been forgiven.
In October 2021, the Ministry of Education announced the PSLF waiver , which extended the benefits to borrowers who had previously been excluded from the program, in particular because they had not obtained the information they needed on how they could become eligible for the PSLF. Under the waiver, any previous payment on a federal student loan by a borrower working in the public service may be considered for PSLF, regardless of payment plan, loan type, or whether the payment was made. in full or on time. This includes payments made through the Federal Family Education Loan (FFEL) and Federal Perkins Loan programs, which previously did not count under the old PSLF rules. In order to qualify for the waiver, many borrowers will need the help of their student loan officer to take action by consolidating their loans, filing a PSLF, or both, before the waiver ends on October 31. 2022.
As repairers administer the new PSLF waiver and assist borrowers, the CFPB expects repairers to comply with federal consumer financial protection laws. The CFPB plans to prioritize the work of monitoring the Student Loans Department in the deployment of its application and oversight resources over the coming year, with particular emphasis on monitoring engagement. with borrowers about the PSLF and the PSLF waiver. The CFPB will pay particular attention to whether:
- Servicers of any type of federal loan provide complete and accurate information about the PSLF waiver when discussing the PSLF or loan consolidation in all communications.
- Services have adequate policies and procedures to recognize when borrowers express interest in PSLF or PSLF waiver, or when their records otherwise demonstrate eligibility, and to refer such borrowers to appropriate resources.
- Service agents are taking steps to promote the benefits of the PSLF waiver to borrowers who express an interest or whose records otherwise demonstrate eligibility.
To prevent unfair, deceptive, or abusive acts or practices, student loan servicers should consider improving their compliance management systems to develop and implement policies and procedures to ensure that all borrowers receive accurate and complete information about the PSLF waiver and that representatives facilitate their registration.
Time is running out as the PSLF waiver ends at the end of October 2022. After the PSLF waiver closes, direct payments to borrowers may be the primary means of remedying relevant breaches.
The CFPB has used its law enforcement and oversight authorities to crack down on illegal student loan management practices. The CFPB’s enforcement work, including actions against Wells Fargo and Discover, has led to tens of millions of dollars in refunds and penalties for borrowers. The CFPB also sued Navient, the nation’s largest student loan service, for widespread violations in its student loan service business. The litigation is ongoing.
Read today’s bulletin, Service Officer Responsibilities in Public Service Loan Forgiveness Communications.
Visit the CFPB Student Loans page to learn more about student loans and borrower rights.
Consumers having a problem resolving a medical debt or experiencing a problem with any other consumer financial product or service can file a complaint with the CFPB online or by calling (855) 411-CFPB (2372).
The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces federal consumer finance law and ensures that markets for consumer financial products are fair, transparent and competitive. For more information, visit consumerfinance.gov.