RSSThe Consumer Financial Protection Bureau vowed to keep a close eye on student loan servicers over compliance with the Public Service Loan Forgiveness program.
The agency issued a bulletin recommending actions servicers should consider taking to ensure they do not misrepresent borrower eligibility or make deceptive statements to borrowers about the PSLF program and an expanded forgiveness waiver issued in October 2021.
“Illegal conduct by a student loan servicer can be ruinous for borrowers who miss out on the opportunity for debt cancellation,” said CFPB Director Rohit Chopra. “We will be working closely with the U.S. Department of Education to ensure that loan cancellation promises for public service are honored.”
“We want to make sure that every single borrower who could benefit from the PSLF Waiver has the chance to do so, and giving borrowers accurate and timely information about their eligibility is critical,” said U.S. Secretary of Education Miguel Cardona. “I appreciate the CFPB’s partnership in holding servicers accountable for their role in helping borrowers access loan forgiveness under PSLF.”
The program, which promises loan cancellation for borrowers who make 120 payments while holding public service jobs, had an unusually high rejection rate for applicants. One estimate from the Department of Education put the number of those eligible for forgiveness at more than 1 million borrowers, but a 2019 report found only 1 percent of applicants were approved for debt cancellation.
That 2019 report prompted criticism of the Education Department’s handling of the program, and the CFPB was sued by a consumer group as well. A group of Democratic senators called for a CFPB investigation into one of the PSLF servicers which later stopped servicing federal student loans. The Education Department and CFPB signed an agreement in 2020 promising better cooperation on PSLF, and last year the Department temporarily expanded eligibility for the program.
That October 2021 waiver, however, requires the assistance of the student loan servicer through loan consolidation or filing paperwork by the Oct 31, 2022 deadline. Some servicers made deceptive statements to borrowers about their ability to become eligible for PSLF, the CFPB said.
“We want to make sure that every single borrower who could benefit from the PSLF Waiver has the chance to do so, and giving borrowers accurate and timely information about their eligibility is critical,” said U.S. Secretary of Education Miguel Cardona. “I appreciate the CFPB’s partnership in holding servicers accountable for their role in helping borrowers access loan forgiveness under PSLF.”
