The company allegedly failed to send appropriate communications to borrowers about reviewing income-driven repayment plans.
01/16/2024 8:00 A.M.
2 minute read
Massachusetts Attorney General Andrea Joy Campbell announced a $1.8 million settlement with Nelnet Inc. (Nelnet), a federal student loan servicer, to resolve allegations the company “failed to appropriately communicate with borrowers about renewing Income-Driven Repayment (IDR) plans that provide access to affordable payments,” according to a news release.
Federal regulations mandate that servicers provide borrowers with at least 60 days’ notice of the recertification deadline for IDR plans and explain the consequences if borrowers fail to meet the deadline, including monthly payment increases.
The attorney general found that “many of Nelnet’s communications with borrowers between 2013 and 2017 failed to comply with these regulations and thus violated state consumer protection law,” according to the news release.
“Student loan servicers play a crucial role in ensuring that borrowers can access more affordable loan payments,” Campbell said. “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.”
The settlement agreement requires Nelnet to pay $1.8 million to the Commonwealth, to comply with federal notice requirements relating to IDR plans, and to implement business practices that make it easier for borrowers to continue making more affordable income-driven payments.
In a statement provided to ACA International, Nelnet said:
“Nelnet extends its appreciation to the Massachusetts Attorney General’s Office for its ongoing eight-year collaboration related to the (IDR) program, which included review of recertifications from 2011 through 2017 and clarified Nelnet’s interpretation of IDR Plan requirements. Nelnet is pleased to close this chapter with improved IDR communications and servicing to borrowers.
In addition to partnering with the United States Department of Education to ensure strict compliance and adherence to federal student loan servicing requirements, Nelnet holds itself to the highest standards when assisting borrowers and helping them achieve their educational pursuits. Both the State of Massachusetts and Nelnet share the common goal of ensuring student loan borrowers are well-informed and have a clear understanding of their student loan repayment options and obligations.”
Under the settlement, Nelnet will pay $1.8 million in restitution, comply with federal notice requirements relating to IDR plans, and enact business practices that make it easier for borrowers to continue making more affordable income-driven payments.
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