The Consumer Financial Protection Bureau (CFPB) imposed a $1 million civil money penalty against Edfinancial Services for deceiving student loan borrowers.
Edfinancial Services is a small, rapidly growing student-loan servicer based in Knoxville, Tennessee. The company promotes itself as an expert in providing assistance to borrowers regarding student-loan forgiveness, repayment options, and other types of loan cancellations.
According to the CFBP, Edfinancial lied to borrowers under the Federal Family Education Loan Program (FFELP) that they were ineligible for Public Service Loan Forgiveness (PSLF).
The Knoxville-based student loan servicer failed to inform borrowers that they could be eligible by consolidating their loans into Direct Loans and by meeting other qualifying requirements.
Additionally, there were instances when Edfinancial falsely told borrowers that their FFELP loans could not be consolidated.
Furthermore, the CFPB found that Edfinancial misrepresented to FFELP borrowers that they were making payments towards PSLF before loan consolidation. Many borrowers were led to believe that they were making progress toward becoming qualified for PSLF. In reality, they were not because they have not consolidated their FFELP loans into Direct Loans.
