May 6, 2024 | WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) took action today against the National Collegiate Student Loan Trusts (NCSLT) and the Pennsylvania Higher Education Assistance Agency (PHEAA), alleging defendants failed to respond to borrowers seeking relief.
CFPB’s action seeks to address “multi-years servicing failures,” in violation of federal consumer protection laws and would require the companies to provide $3 million in relief to borrowers in addition to fines paid to the CFPB.
In response, Winston Berkman-Breen, Legal Director at the Student Borrower Protection Center, issued the following statement:
“Today’s action and proposed judgment is an important reminder that private student loan borrowers, although a smaller population than their federal student loan counterparts, are also plagued by predatory companies seeking to profit at their expense. These companies either failed to respond to borrowers’ requests for assistance, or provided inaccurate information. Making borrowers wait years for responses from their servicers, as the CFPB’s complaint alleges, is unacceptable. We are encouraged to see the CFPB recognize this harm and put money back in the pockets of borrowers.
“The NCSLT’s and PHEAA’s failure to deliver basic servicing functions, especially during the pandemic, to student loan borrowers is a textbook example of the misconduct that has plagued the student loan industry for years. Before 2015, the year in which the conduct in the CFPB’s action began, no state had student loan-servicing specific borrower protections. By 2024, 19 states have enacted Borrower Bill of Rights laws, setting industry standards and prohibiting much of what today’s action addresses.
“We applaud the CFPB’s ongoing efforts in federal court to hold NCSLT accountable. Today’s announcement is just weeks after a ruling by the Third Circuit Court of Appeals that the NCSLT is subject to the agency’s authority. We urge the Bureau to continue to litigate that case vigorously, as it involved robo-signing and other claims not at issue in today’s announcement.”
Further Reading
SBPC’s Amicus Brief before the Third Circuit Court of Appeals in CFPB v NCSLT: https://protectborrowers.org/amicus-brief-supporting-the-consumer-financial-protection-bureaus-right-to-sue-the-national-collegiate-student-loan-trusts-for-cheating-borrowers/
Blog post on NCSLT lawsuits in California: https://protectborrowers.org/shocking-new-data-shows-why-california-lawmakers-must-protect-borrowers-and-rein-in-abusive-student-loan-debt-collectors/
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About Student Borrower Protection Center
Student Borrower Protection Center (SBPC) is a nonprofit organization focused on eliminating the burden of student debt for millions of Americans. We engage in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance racial and economic justice.
Learn more at protectborrowers.org or follow SBPC on Twitter @theSBPC.