Pennsylvania Higher Education Assistance Agency, and National Collegiate Student Loan Trusts
On May 6, 2024, the Consumer Financial Protection Bureau filed a complaint and two proposed stipulated final judgments to resolve the Bureau’s claims against the National Collegiate Student Loan Trusts (the Trusts) and the Pennsylvania Higher Education Assistance Agency d/b/a American Education Services (PHEAA), respectively. PHEAA is a student loan servicer and has been the primary servicer for loans held by the Trusts since at least 2006. The Bureau alleges that the Trusts and PHEAA violated the Consumer Financial Protection Act of 2010’s (CFPA) prohibition on unfair and deceptive acts and practices in connection with their multi-year failures to properly process and respond to student loan servicing requests from student borrowers, including requests for relief as a result of the COVID-19 pandemic. Specifically, the Bureau alleges that: (1) defendants misrepresented that borrower requests would be answered when, in fact, they would not; (2) the Trusts failed to put into effect a functioning process for deciding borrower requests; (3) PHEAA failed to grant natural disaster forbearance in connection with the COVID-19 pandemic; and (4) PHEAA failed to inform borrowers seeking COVID-19 forbearance of available payment relief options and other key information about the Trusts’ failures. If entered by the court, the stipulated final judgments will require the Trusts and PHEAA to pay $400,000 and $1.75 million in civil money penalties, respectively, and pay nearly $3 million in redress to affected consumers. The orders also would require significant non-monetary relief, including granting certain pending borrower requests, correcting credit reporting, and ceasing debt collection activities; they would also impose injunctive relief requiring, among other things, the implementation of a functional process going forward for processing of student borrower requests.
Related documents
Proposed Stipulated Final Judgment and Order as to the National Collegiate Student Loan Trusts
Proposed Stipulated Final Judgment and Order as to Pennsylvania Higher Education Assistance Agency