State lawmakers should prevent such abuses before they occur
DURHAM, N.C. – On Friday, New York Attorney General Letitia James and Department of Financial Services Superintendent Maria T. Vullo announced a settlement with ACS Education Services, now Conduent Education Services, that will require the student loan servicer to pay $9 million for deceiving student loan borrowers about their repayment options. Among other abuses, the officials found that ACS had overcharged military servicemembers and had failed to put borrowers into the income-based repayment plans for which many qualified.
Center for Responsible Lending Deputy Director of State Policy Lisa Stifler issued the following statement:
Education is meant to provide a path for hardworking people to achieve security and prosperity. Unethical student loan servicers sabotage those efforts with practices that make the debt load unmanageable, especially for students of color, low-income students, and servicemembers and their families. And some of these students are dealing with loans they borrowed to attend for-profit colleges that never fulfilled the promises these institutions made.
Steering borrowers who are struggling to make payments into higher-cost plans is simply wrong. Charging our military personnel higher interest than they are guaranteed by law is unconscionable. We applaud Attorney General James and Superintendent Vullo for securing this measure of justice for student borrowers.
State lawmakers can prevent this sort of abuse before it happens by passing reform that has been on the table in New York and has passed in several other states -- measures that establish state oversight of student loan servicers and prohibit predatory and abusive practices. In the midst of this national $1.5 trillion student debt crisis, and at a time when the federal government is stepping back from its oversight duty, states must step up and protect their citizens from harm.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Carol Hammerstein at carol.hammerstein@responsiblelending.org.