student loan officer Financial services lied to borrowers about their forgiveness and repayment options, the Consumer Financial Protection Bureau said Wednesday, March 30.
The CFPB thus sanctions the Tennessee company, ordering it to pay a fine of 1 million dollars and to contact all borrowers and give them precise information.
“Edfinancial’s failure to tell borrowers the full truth, so it can inflate its results, highlights a systemic problem with payday loan servicing,” CFPB Director Rohit Chopra said in a statement. . Press release. “When student loan companies lie about forgiveness and repayment programs for borrowers, they are breaking the law.”
Edfinancial representatives were not immediately available for comment Wednesday.
Read more: CFPB warns student loan officers against public service forgiveness
The news comes weeks after the CFPB issued a bulletin warning student loan managers they could face penalties if they mislead borrowers about public service-related loan forgiveness schemes.
CFPB and U.S. Department of Education officials recently said the practices Edfinancial is accused of are part of a larger pattern of student loan service companies misleading borrowers about their eligibility for forgiveness programs. .
According to the CFPB, Edfiancial deceived borrowers by telling them they were not eligible for student loan forgiveness through the Public Service Loan Forgiveness Act (PSLF).
This law, which dates back to 2008, stipulates that borrowers who work in public service such as the military or in local, state, tribal or federal government, as well as certain nonprofit organizations, can be eligible for loan forgiveness.
As PYMNTS previously reported, the federal government estimates that 1.3 million borrowers are eligible to have their direct loans forgiven because they work in these fields and have made monthly payments for 10 years.
The CFPB says Edfiancnial also failed to tell borrowers they had loans that could be consolidated. The company is also accused of falsely telling borrowers that certain jobs were not illegible for loan cancellation and of mentioning the PSLF law when talking about loan cancellation programs.