The Consumer Financial Protection Bureau (CFPB) has issued a bulletin warning student loan servicers that they could face sanctions if they mislead borrowers about loan forgiveness programs tied to public service, according to a Friday (Feb. 18) press release.
“The bulletin recommends actions servicers should consider taking to ensure they do not misrepresent borrower eligibility or make deceptive statements to borrowers about the [Public Service Loan Forgiveness (PSLF)] program and the (PSLF) waiver,” the release stated.
CFPB Director Rohit Chopra said in the release: “Illegal conduct by a student loan servicer can be ruinous for borrowers who miss out on the opportunity for debt cancellation. We will be working closely with the U.S. Department of Education to ensure that loan cancellation promises for public service are honored.”
Officials from the CFPB and federal Department of Education have said in recent months that some companies that service student loans have misled borrowers about their eligibility for forgiveness programs, according to the release.
The federal government estimates that 1.3 million student loan borrowers are eligible to have their direct loans canceled because they work in designated public service professions and have made 10 years of monthly payments, the release stated.
“We want to make sure that every single borrower who could benefit from the PSLF waiver has the chance to do so, and giving borrowers accurate and timely information about their eligibility is critical,” said U.S. Secretary of Education Miguel Cardona in the release.
The CFPB said in the release that bureau staff will examine companies to ensure they: “provide complete and accurate information about (waiver programs) when discussing PSLF or loan consolidation in any communications;” “have adequate policies and procedures to recognize when borrowers are expressing interest in (forgiveness programs); and “take steps to promote the benefits of (waivers) to borrowers who express interest or whose files otherwise demonstrate their eligibility.”