In a letter to the Pennsylvania Higher Education Assistance Agency (PHEAA), the SBPC warns the company that providing incorrect, misleading information to borrowers related to the recent overhaul of the Public Service Loan Forgiveness (PSLF) program violates federal and state consumer financial protections. The letter highlights evidence of PHEAA providing inaccurate information to borrowers about changes to PSLF, misapplying or wholly ignoring provisions of the overhaul, and failing to promptly and substantially respond to questions from public service workers with student loan debt.
Last month’s announcement by the Department of Education to overhaul the PSLF program opened a path to promised debt relief for hundreds of thousands of public service workers. This announcement came after years of pressure by advocates and 45,000 borrowers sharing their stories in response to a public inquiry launched by the Biden Administration earlier this year. However, loan servicing problems continue to threaten the success of the program. In order to ensure the program overhaul is effective and that borrowers can access promised relief, the SBPC will continue to closely monitor student loan servicing companies and work with state partners to hold these companies accountable for violations of the law.
Over the past five years, more than a dozen states have passed new consumer protection laws allowing state governments and individual borrowers to hold student loan companies accountable through the court system. PHEAA’s harmful actions are just the type of practices these laws were created to help address by empowering states and citizens to stand up for themselves, even when the federal government has yet to act.