NJ Attorney General Sues National Student Loan Servicer For Deceptive Practices

On October 20, 2020, New Jersey Attorney General Gurbir S. Grewal (“NJ AG”) and the New Jersey Division of Consumer Affairs announced that they had filed suit in New Jersey state court against a national student loan servicer for alleged unconscionable commercial practices and deception and misrepresentations made to thousands of New Jersey consumers, in violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-2.

The NJ AG filed suit following receipt of approximately 1,000 consumer complaints and an investigation into the company, which allegedly found that the company’s call center representatives had steered borrowers into costly forbearance instead of more appropriate income-based repayment plans, the company failed to notify borrowers about deadlines to recertify their eligibility for income-based repayment plans, and the company misled borrowers about how much they were past due in order to receive early payments.  The complaint also alleges that the company encouraged borrowers to take out private student loans with a cosigner, and then made it difficult for borrowers to release cosigners from their loans later.

The NJ AG seeks restitution for affected persons, disgorgement, statutory civil penalties, costs and attorneys’ fees, and injunctive relief.