The Attorney General of Massachusetts has announced that one of the nation’s largest servicers of student loans will pay a fine of $1.8 million after it was accused of failing to communicate with borrowers about renewing income driven repayment programs.
The Background: Under income driven repayment programs, borrowers are required to document their income and the size of their family with their loan servicer, and recertufy the information every year.
- Servicers are supposed to provide notice of the recertification to borrowers at least 60 days in advance of the deadline. Servicers are also expected to share the consequences if borrowers fail to recertify before the deadline, including how much the borrower’s monthly payment will increase and that any unpaid interest will be added to the loan amount.
- An investigation by the Attorney General’s office uncovered that between 2013 and 2017, many of Nelnet’s communications with borrowers failed to comply with those regulations and thus violated state consumer protection laws.
The Enforcement Action: Nelnet will pay a fine of $1 million for its failures to notify borrowers properly, and pay $800,000 to the state’s Student Loan Trust Fund.
The Last Word: “Student loan servicers play a crucial role in ensuring that borrowers can access more affordable loan payments,” said Massachusetts AG Andrea Joy Campbell. “As we continue to address issues of affordability, we will prioritize student loan debt and hold service providers accountable when they fail to fulfill their notification and information obligations to Massachusetts borrowers.”
