ALBANY, N.Y. — A federal student loan servicer has reached a $9 million settlement with New York state to resolve charges the company deceived borrowers regarding repayment plans and on the availability of loan forgiveness for those working in public service.
According to the New York Attorney General and the New York Department of Financial Servcies, ACS Education Services, now Conduent Education Services, led borrowers at risk of defaulting on their loans into more expensive repayment plans and also misled borrowers about the Public Service Loan Forgiveness (PSLF) program that is available for those who work in a public-service job for 10 years.
“Students rely on college to be a ladder to success but too often prohibitive costs and disingenuous loan servicers trap students in a quicksand of debt,” New York Attorney General Letitia James said in a statement. “ACS has systematically failed borrowers by refusing to educate them on more effective federal repayment options and, instead, pushing them toward options that padded their bottom line. At a time when the student debt crisis is at an all-time high, federal loan servicers should be supporting borrowers, not deceiving them at every turn."
“While the federal government neglects students, New York once again acts," added New York Department of Financial Services Superintendent Maria Vullo. "[This] action demonstrates the importance of states in taking action against student loan servicers who fail to respond to the needs of student loan borrowers as required by federal and state laws."
As part of the settlement, ACS will also cease from servicing loans for major federal programs or private loans for five years, according to the Attorney General's Office.