Statement from Seth Frotman, SBPC Executive Director and former CFPB Student Loan Ombudsman on Bodor v. Maximus
Consumer Protection Lawsuit Opens a New Front in the Fight to Demand Justice for Student Loan Borrowers
February 12, 2020 | WASHINGTON, DC —Student Borrower Protection Center Executive Director and former CFPB Student Loan Ombudsman Seth Frotman released the following statement on the lawsuit announced today by the National Consumer Law Center and Justice Catalyst Law against Maximus, Inc. (NYSE: MMS).This lawsuit seeks to hold Maximus, one of the U.S. Department of Education’s largest student loan contractors, accountable for illegally collecting against borrowers who sought debt relief after being defrauded by for-profit colleges.
“This lawsuit sends a message to every student loan company in America—if you prey on borrowers, you will face justice. The victims of Maximus’s abuses are borrowers hit hardest by the student debt crisis—defrauded by for-profit schools, denied debt relief by the Trump Administration, and now cheated out of their last dollar by a rogue government contractor. Nobody is above the law—not Besty Devos, and certainly not companies like Maximus that are getting rich off the backs of struggling student loan borrowers. We commend our partners at the National Consumer Law Center and Justice Catalyst Law for bringing this groundbreaking case to protect borrowers.”
Last year, Education Secretary Betsy DeVos was held in contempt of court by a federal magistrate judge in California for failing to halt collection efforts against tens of thousands of student loan borrowers who were defrauded by Corinthian Colleges. Betsy DeVos ignored these borrowers’ rights under federal law and failed to comply with an order from the court. Documents produced in that case, brought bythe Project on Predatory Student Lending at the Legal Services Center of Harvard Law School and Housing & Economic Rights Advocates, also reveal that the U.S. Department of Education failed to hold its contractors, including Maximus, accountable for following the law. Today’s action demonstrates that borrowers can seek justice from these private-sector companies directly when their rights are violated.
A press release on Bodor v. Maximus issued by National Consumer Law Center and Justice Catalyst Law is available at: https://www.nclc.org/media-center/defrauded-borrowers-sue-u-s-department-of-education-contractor-for-seizing-funds-while-they-wait-in-limbo-for-borrower-defense-relief.html
The Complaint filed against Maximus, Inc. is available at: https://www.nclc.org/images/pdf/litigation/complaint-bodor-v-maximus-dec2019.pdf
A blog post authored by SBPC Managing Counsel Mike Pierce on the litigation is available at: https://protectborrowers.org/a-new-debt-collection-lawsuit-gives-us-a-glimpse-at-the-future-of-student-loan-servicing-for-tens-of-millions-of-borrowers/
About the Student Borrower Protection Center (SBPC):
The Student Borrower Protection Center (www.protectborrowers.org) is a nonprofit organization solely focused on alleviating the burden of student debt for millions of Americans. SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students. Led by the team of former federal regulators that directed oversight of the student loan market at the Consumer Financial Protection Bureau, SBPC exposes harmful and illegal practices in the student loan industry, drives impact litigation, advocates on behalf of student loan borrowers in Washington and in state capitals, and promotes progressive policy change. SBPC accomplishes these goals by partnering with leaders at all levels of government and throughout the nonprofit sector.