CFPB Files Complaint and Proposed Final Judgments Against Higher Education Assistance Agency and National Collegiate Student Loan Trusts

On May 6, 2024, the Consumer Financial Protection Bureau (CFPB) announced that it filed a complaint ​and two proposed stipulated final judgments to resolve its claims against the National Collegiate Student Loan Trusts (the Trusts) and the Pennsylvania Higher Education Assistance Agency​ d/b/a American Education Services (PHEAA). The CFPB alleges that the Trusts and PHEAA violated the Consumer Financial Protection Act’s (CFPA) prohibition on unfair and deceptive acts and practices by failing to properly process and respond to student loan servicing requests from student borrowers.

The Trusts are a group of fifteen securitization trusts that acquire, pool, and securitize student loans, which they then service. PHEAA is the primary servicer of active loans held by the Trusts. In its complaint,​​ the CFBP alleges that from 2015 until 2021: 1) PHEAA misrepresented that consumer exception requests would be answered; 2) the Trusts failed to institute a functioning process for deciding exception requests; 3) PHEAA failed to grant natural disaster forbearance for COVID-19; and 4) PHEAA failed to inform borrowers seeking COVID-19 forbearance extensions of their payment relief options.  The complaint further alleges that the Trusts have vicarious liability for PHEAA’s misrepresentations that exception requests would be answered. ​

The CFPB, the Trusts, and PHEAA agreed to enter into stipulated final judgments and orders to settle all matters in dispute arising out of the allegations in the complaint, pending the court’s approval. Under the orders, the Trusts agree to pay a civil money penalty of $400,000 and PHEAA agrees to pay a civil money penalty of $1.75 million into the CFPB’s victim relief fund. The Trusts and PHEAA also agreed to make a $200 redress payment to each consumer who did not receive timely responses to exception requests, amounting to a total of $2,886,817. The defendants also agreed to provide non-monetary relief including granting certain pending borrower requests, correcting credit reporting, and ceasing debt collection activities.