The Consumer Financial Protection Bureau (CFPB) has filed a complaint against the National Collegiate Student Loan Trusts and Pennsylvania Higher Education Assistance Agency (PHEAA), alleging that they ignored student loan borrowers seeking payment relief.
If entered by the court, the CFPB’s proposed stipulated final judgments would require the National Collegiate Student Loan Trusts and the PHEAA to pay $400,000 and $1.75 million in penalties, respectively, pay nearly $3 million in redress to harmed borrowers, and correct outstanding requests, the CFPB said in a Monday (May 6) press release.
“The CFPB has taken action against a web of investment trusts that failed student loan borrowers, including at the height of the pandemic,” the agency said in the release. “Our law enforcement action makes clear that investors cannot sidestep accountability by playing games of corporate musical chairs.”
Reached for comment by PYMNTS, the PHEAA said in an emailed statement: “While we maintain that PHEAA had no authority to decision unique borrower requests without instruction from 2016-2021, we are pleased to bring this multi-year review by the CFPB to a resolution.”
“The parties have come together to finalize a plan for the impacted borrowers and have agreed upon procedures for addressing similar borrower requests in the future,” the statement added. “PHEAA will continue to work cooperatively with the CFPB and trust parties to ensure the best outcomes for borrowers.”
In its case, the CFPB alleges that from 2015 to 2021, the defendants failed to properly respond to thousands of borrower requests for co-signer release, extension of forbearance or deferment, loan settlement or forgiveness, Servicemember Civil Relief Act benefit, or other forms of payment or interest rate reduction, according to the release.
Specifically, the agency alleges that the National Collegiate Student Loan Trusts failed to ensure responses to borrower requests, the PHEAA failed to provide accurate information to borrowers and the PHEAA incorrectly denied forbearance requests having to do with the COVID-19 pandemic, the release said.
Today’s action is the second public enforcement action the CFPB has taken against the National Collegiate Student Loan Trusts, according to the release. The first one, which was launched in 2017 and alleges that the National Collegiate Student Loan Trusts brought improper debt collection lawsuits for private student loan debt, is pending in federal court, per the release.