Colorado AG sues student loan company | Western Colorado
Colorado Attorney General Phil Weiser has filed a lawsuit against a Pennsylvania company that has the sole contract to manage the federal public service loan forgiveness program.
This program, created by Congress in 2007, is designed to encourage recent college graduates who have significant student debt to take jobs in the nonprofit or government sectors.
Those who do, and stay in those jobs for a decade, may have their annual loan repaid, with the rest being canceled after that 10-year period.
But the company that won the government’s contract to run the program, Pennsylvania Higher Education Assistance Agency, also known as FedLoan Servicing, has failed to produce documents showing it is complying with the country’s consumer protection laws. Colorado, Weiser said.
This company had problems managing the federal program, including extremely low approval rates for eligible students, and gave false information that borrowers had eligible loans and repayment plans, a- he declared.
“Dedicated Colorado officials such as teachers, firefighters, and nurses are entitled to participate in the Public Service Loan Forgiveness Program and deserve the protections afforded to them by Colorado law,” Weiser said. “State oversight, like that outlined in the Colorado Student Loan Services Act, is needed to ensure that student loan managers like the PHEAA are complying with the law.”
Weiser said his office had requested certain documents to see how the company was running the program during the pandemic. The company failed to do so, Weiser said.
The lawsuit, filed in Denver District Court, seeks a temporary and permanent injunction calling on the company to comply with state oversight, which is done through Weiser’s office.
Colorado’s Student Loan Protection Act, approved by the Legislature in 2019, also created a Student Loans Ombudsman in Weiser’s office to help students with problems with their loans.