For the second time in a month, the Consumer Financial Protection Bureau (CFPB) has filed an enforcement action against the Pennsylvania Higher Education Assistance Agency (PHEAA), a major student loan servicer. This latest lawsuit, filed in Pennsylvania federal court, accuses PHEAA of pursuing unlawful collections on loans discharged in bankruptcy.
US CFPB Sues Student Loan Servicer For Illegal Collections : Allegations of Illegal Collections
In a complaint filed Friday, the CFPB alleges that PHEAA, also known as American Education Services, lacks proper protocols for identifying which private student loans in its servicing portfolio have been discharged. Consequently, PHEAA treats these discharged loans as if they still require repayment.
This oversight has led PHEAA to report inaccurate information to credit bureaus and attempt collections on discharged loans. Borrowers have been forced into the position of either paying debts they no longer owe or risking damage to their credit history by refusing to pay, according to the complaint.
