CFPB Sanctions Student Loan Servicer for Violations of CFPA

The CFPB recently issued a consent order concerning its allegations of violations of the Consumer Financial Protection Act (CFPA) against a student loan servicer.  The servicer, which marketed itself to borrowers and the public as providing expert help in navigating student-loan repayment options, was alleged to have made deceptive statements to student loan borrowers with Federal Family Education Loan Program (FFELP) loans and mispresented their forgiveness and repayment options through the Public Service Loan Forgiveness (PSLF).

Specifically, the CFPB alleged that the servicer engaged in “deceptive acts and practices” prohibited by the CFPA by making misrepresentations that FFELP borrowers could not receive PSLF; that FFELP borrowers were making payments towards PSLF before loan consolidation; and that certain jobs were not eligible for PSLF.  The CFPB also alleged that the servicer described forgiveness programs to FFELP borrowers without mentioning PSLF.

The consent order requires the company to pay a civil money penalty of $1 million to the CFPB.  The student loan servicer did not admit or deny the CFPB’s allegations.