Massachusetts AG Takes Action Against Federal Loan Servicer for Unfair or Deceptive Practices

State Issues State Attorney General Student Lending UDAAP

On August 23, Massachusetts Attorney General Maura Healey filed a complaint in the Suffolk County Superior Court against the Pennsylvania Higher Education Assistance Agency (d/b/a FedLoan Servicing) for allegedly overcharging borrowers and improperly processing claims for public service loan forgiveness. According to the Commonwealth’s lawsuit, the loan servicer purportedly engaged in unfair or deceptive acts or practices by, among other things, (i) failing to timely and properly process applications for Income Driven Repayment plans and thereby denying borrowers the opportunity to make qualifying payments under forgiveness programs; (ii) failing to properly count qualifying payments under the Public Service Loan Forgiveness program; (iii) failing to properly process certification forms in connection with the Teacher Education Assistance for College and Higher Education Grant program, thereby causing grants to be converted into loans; and (iv) collecting amounts not legitimately due and owing and failing to refund them. The complaint seeks restitution, civil penalties, reimbursement of the Commonwealth’s costs and expenses, and injunctive relief.