The Consumer Financial Protection Bureau (CFPB) has issued a bulletin warning student loan servicers that they could face penalties if they mislead borrowers about utility-related loan forgiveness programs, according to a Friday, February 18. Press release.
“The bulletin recommends actions that service agents should consider taking to ensure that they do not misrepresent borrower eligibility or make misleading statements to borrowers about the [Public Service Loan Forgiveness (PSLF)] Program and Derogation (PSLF),” the statement read.
CFPB Director Rohit Chopra said in the statement, “The unlawful conduct of a student loan officer can be ruinous for borrowers who miss the opportunity to cancel their debt. We will work closely with the U.S. Department of Education to ensure that public service loan forgiveness pledges are honored.
Officials from the CFPB and the federal Department of Education have said in recent months that some companies that handle student loans mislead borrowers about their eligibility for remission programs, the statement said.
The federal government estimates that 1.3 million student borrowers are eligible to have their direct loans forgiven because they work in designated public service occupations and have made 10 years of monthly payments, the statement said.
“We want to make sure that every borrower who could qualify for the PSLF waiver has the opportunity to do so, and giving borrowers accurate and timely information about their eligibility is critical,” the U.S. Secretary of Education said. Miguel Cardona, in the press release.
The CFPB said in the statement that office staff will review companies to ensure they: “provide complete and accurate information on (exemption programs) when reviewing PSLF or consolidating ready in all communications”; “have adequate policies and procedures to recognize when borrowers express interest in (forgiveness programs); and “take steps to promote the benefits of (waivers) to borrowers who express interest or whose records otherwise demonstrate eligibility.”
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