Edfinancial deceived borrowers with Federal Family Education Loan Program or FFELP loans about their eligibility for public service loan forgiveness, despite a recent overhaul of the program that makes many of those borrowers eligible, the Consumer Financial Protection Bureau said.
THE CFPB is ordering the company to contact all affected borrowers, provide them with accurate information, and pay a $1 million penalty.
“Edfinancial’s failure to tell the full truth to borrowers, so it could pad its bottom line highlights a systemic problem with loan servicing,” said CFPB Director Rohit Chopra. “When student loan companies lie about cancellation and repayment programs for borrowers, they are breaking the law.
The CFPB found Edfinancial harmed student loan borrowers by:
- Misrepresenting that FFELP borrowers couldn’t receive loan forgiveness.
- Misrepresenting that FFELP borrowers were making payments towards loan forgiveness before loan consolidation.
- Misrepresenting to borrowers that some jobs weren’t eligible for loan forgiveness.
- Describing forgiveness programs to FFELP borrowers without mentioning newer loan forgiveness provisions.
Students and their families can find help on how to deal with their student debt through the CFPB’s Paying for College tools.
Student loan borrowers experiencing problems related to student loans can submit a complaint to the CFPB.