New York sues student loan company over debt forgiveness for those in public service

Source: Washington Post

New York Attorney General Letitia James on Thursday sued Pennsylvania Higher Education Assistance Agency, a student-loan-servicing company, alleging widespread mismanagement of a loan forgiveness program for public servants. James has accused the company, which also operates under the name FedLoan Servicing, of haphazardly handling a federal program that encourages college graduates to enter fields serving the public good with the promise of having their student debt canceled.

The program requires borrowers to make 120 loan payments while working in the public sector for 10 years to have their remaining balance forgiven. James alleges that FedLoan, which runs the program for the Education Department, has miscounted payments, provided inconsistent information and failed to inform borrowers of their right to appeal mistakes.

Those breakdowns in the administration of the program, she said, have contributed to a large number of rejected applications for loan forgiveness, the complaint said. Fewer than 900 of the more than 90,000 applicants had their discharges approved and processed as of June, according to the Education Department. “Despite a decade of honorable public service to our state and this nation, hard-working New Yorkers have been left with nothing but the runaround and broken promises,” James said in a statement Thursday. The company’s “abuses have not only denied these dedicated public servants the benefits they have earned, but have undermined the goals of the loan forgiveness program."

The lawsuit, filed in U.S. District Court for the Southern District of New York, seeks restitution for state residents it says were harmed by the loan servicer and to stop the continuation of those practices.

Read more: https://www.washingtonpost.com/education/2019/10/03/new-york-sues-student-loan-company-over-debt-forgiveness-those-public-service/