CFPB Files Stipulated Judgment and Order with Student Loan Servicer

The CFPB recently entered into a stipulated final judgment and order with what was previously one of the largest companies contracted by the U.S. Department of Education to service federal student loans, banning the servicer from servicing federal Direct Loans and most Federal Family Education Loan Program loans.

The lawsuit alleges violations of the Consumer Financial Protection Act, the Fair Credit Reporting Act, and the Fair Debt Collection Practices Act.  The lawsuit alleged that the servicer steered borrowers into costly repayment options, deprived them of affordable income-driven repayment plans, and misallocated payments.

Under the Stipulated Final Judgment and Order, the servicer will pay a $20 million penalty and provide $100 million in redress to harmed borrowers.