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DFS Announces Settlement with Conduent for Illegal and Improper Student Loan Practices

Posted on January 8, 2019 at 7:20 PM
New York's Department of Financial Services and Attorney General announced they have entered into a joint settlement with Conduent Education Services, LLC, formerly known as Xerox Education Services, LLC, and formerly known as and doing business as ACS Education Services, Inc. (Conduent), for engaging in practices that harmed student loan borrowers. The announcement is part of DFS???s ongoing efforts to protect student borrowers from harmful and illegal student loan practices. The DFS and NYAG investigations found that Conduent violated federal and state laws while servicing federal and private student loans by: - Steering borrowers with federal loans into forbearance instead of an income-based repayment plan (IBR); - Steering borrowers with federal loans into IBR, or forbearance, instead of new and more favorable repayment programs known as Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE); - Misinforming borrowers, including servicemembers, that they are ineligible for public service loan forgiveness; - Unduly delaying borrowers from being able to consolidate their federal loans into Direct Loans; - Failing to process IBR applications in a timely and accurate manner; - Allocating underpayment for certain borrowers in a way that maximized late fees; - Misinforming delinquent borrowers that they are required to pay both any delinquent amount and the present month???s payment immediately; - Misapplying borrowers??? payments; - Reporting incomplete and erroneous information to credit reporting agencies; - Failing to properly recalculate monthly payments for servicemembers when adjusting their interest rates under the Servicemember Civil Relief Act; - Charging improper late fees; and - Failing to notify borrowers of their eligibility for a co-signer release. In addition, the investigations further found that Conduent???s illegal, deceptive and unfair acts and practices increased the amounts that certain borrowers paid over the lifetime of their loans. As a result, Conduent will pay a civil penalty of $1 million to the State of New York, and $8 million in restitution to impacted New York consumers. Conduent, which has wound down its student loan servicing business, has agreed not to service student loans (except for Perkins Loans) for five years. Read More: Release https://www.dfs.ny.gov/about/press/pr1901041.htm Order https://www.dfs.ny.gov/about/ea/ea190104_conduent.pdf For more information about DFS???s Student Protection Unit, please visit https://www.dfs.ny.gov/consumer/student_protection/dfs_student_protection.htm. A copy of the consent order can be found here.

Categories: Fraud