(FFEL-22-01) FSA Letter to FFEL Program Participants – Responsibilities to Borrowers Seeking to Benefit from the Public Service Loan Forgiveness Program

Author
Office of the Chief Operating Officer
Electronic Announcement ID
FFEL-22-01
Subject
FSA Letter to FFEL Program Participants – Responsibilities to Borrowers Seeking to Benefit from the Public Service Loan Forgiveness Program

The Consumer Financial Protection Bureau (CFPB) today took action against EdFinancial Services, a student loan servicer, for making deceptive statements to student loan borrowers and misrepresenting their forgiveness and repayment options to them. In conjunction with this announcement, FSA Chief Operating Officer Richard Cordray issued a letter to program participants in the Federal Family Education Loan Program (FFEL) regarding responsibilities and expectations for all federal student loan companies. The text of the letter is below.

Dear FFEL Program Participants:

Today the Consumer Financial Protection Bureau (CFPB) announced a settlement with EdFinancial Services for misstatements made to FFEL borrowers that may have impeded them from benefiting from Public Service Loan Forgiveness. The settlement is focused on four specific categories of misstatements: (1) wrongly stating that FFEL borrowers could not receive PSLF; (2) wrongly stating that some FFEL borrowers were making payments toward PSLF before consolidating their loans; (3) wrongly stating that certain jobs were not eligible for PSLF; and (4) describing forgiveness programs to FFEL borrowers without mentioning PSLF.

We have no reason at all to think that these issues – which dated from at least January 2017 through at least February 2021 – were unique to EdFinancial. To the contrary, they may well reflect the longstanding approach to how others were handling these same issues during the same period and perhaps even now. Therefore, we wanted to bring these issues to the immediate attention of every company that deals with FFEL borrowers. Our goal is to ensure that these issues do not recur, anywhere, from here forward. FSA and CFPB can be expected to pursue further oversight of these issues, and every company should take pains to address them at once, so as to avoid penalties or other consequences.

Moreover, in October 2021, we announced a time-limited waiver to certain PSLF program requirements to help more public servants access the debt relief under PSLF. Above and beyond the issues described above, which predate the PSLF waiver, we are also concerned that some FFEL servicers are not providing adequate information and assistance to all borrowers who may benefit from the waiver.

Federal Student Aid has provided clear guidance about the PSLF waiver, appropriate language to use in communicating with FFEL borrowers, and regular updates as implementation progresses. All companies that deal with FFEL borrowers need to ensure that FSA’s guidance is being provided to their borrowers timely and accurately. This includes actively informing borrowers about available programs for debt relief, any changes to these programs, and providing complete information in response to inquiries and complaints. The hallmark of a borrower-centered student loan system is ensuring that borrowers have all the information they need to best serve their financial interests.

We will continue to partner with federal and state officials to further our accountability and oversight efforts. As always, our mission is to enable borrowers to access the full benefits and protections that Congress has afforded them.

Please refer to the Dear Colleague Letter we sent to all participants in the FFEL program as well as the updated talking points that we have provided to our own contact centers. We strongly encourage all companies that serve FFEL borrowers to use these talking points as well. More information is also available at studentaid.gov/pslfwaiver.

Sincerely,

Richard Cordray
Chief Operating Officer
Federal Student Aid