Student loan servicers received quite a bit of heat earlier in the year for their performance and practices. In short and layman’s terms, they are making it hard on student loan borrowers. The Consumer Financial Protection Bureau (CFPB) caught Federal and state government student loan servicers numerous times by analyzing complaints from borrowers. This led to investigations which brought up malpractice on many different levels.
One famous example from recent news involved Wells Fargo who was fined by the CFPB for illegal student loan servicing. It did not end there either; for instance, unsettling debt collection practices were discovered in New Jersey. In addition to multiple infractions by private companies and state government entities, the federal student loan servicing system received its own criticism after a large volume of complaints about federally-employed servicer companies were discovered. While this led to the creation of a new feedback complaint system, the issues simply have not subsided which brings us to a new story.
A new student loan servicer has reached the spotlight. This time, ACS Education Services (or newly-named Xerox Education Services) has been fined $2.4 million by the Massachusetts Education Finance Authority for servicing malpractice. ACS Education Services covers nearly 140,000 borrowers in the area, and a portion of this fine is meant to reimburse victimized borrowers.
ACS has been accused of prolonging its borrowers state of debt which is definitely a red flag by today’s standards. To be more specific, ACS Education Services neglected to offer new repayment plans to struggling borrowers as required by law; additionally, the servicer company was accused of partaking in debt collection harassment. On top of all this, their late fees were excessively high.
All of these actions took place following the discovery of over half a thousand complains against ACS Education Services. These complaints were funneled into the CFPB through the new feedback portal which was mentioned earlier. So far, the new system appears to be accomplishing its designated task
This story is part of a trend that is becoming more prominent each month. Student loan servicers are becoming increasingly accountable for malpractice and mistreatment of borrowers. This is good news for any borrower who finds themselves on the short end of the stick when it comes to their student loan endeavors.
These developments are a by-product of changes being made in the overall industry as well as an overall increased level of awareness. Since more attention is being brought to the national student loan issue (an example would be the commonly quoted debt statistics), more attention is trickling down onto individual companies and entities that have their hands on part of the industry. Increased accountability will help alleviate some of the student loan pressure on the average borrower.
At the end of the day, it falls on proper student loan repayment on the borrowers account. Proper servicing practices helps ensure that this becomes a reality for borrowers trying to rid themselves of their education loans.