KS&G Investigates Student Loan Servicer

Since 2009, the Pennsylvania Higher Education Assistance Agency (“PHEAA”), one of four primary servicers of federal student loan debt, has allegedly delayed or failed to process applications under the Public Service Loan Forgiveness program and the Teacher Education Assistance for College and Higher Education grant program. The programs are designed to make higher education more affordable for public servants by providing financial assistance to reduce the burden of their student loans, and they include complete forgiveness of federal student debt for borrowers who commit to 10 years of qualifying public service employment. This misconduct directly injured borrowers who were required to make additional payments on loans that otherwise would have been forgiven. Financial statements show that PHEAA’s revenue from servicing federally owned student loans has increased each year, a direct result of the unlawful acts alleged.

As a result, the proposed class of borrowers have lost out on months or years of qualifying loan payments that would have brought them closer to loan forgiveness, been overcharged fees or were otherwise disadvantaged when they were unable to utilize federal programs designed to make their education more affordable.

As part of the alleged strategy to increase profits, PHEAA allegedly delayed or failed to process applications for federal Income Driven Repayment, or IDR, plans, including the new Revised Pay As You Earn program created in 2015. The plans allow borrowers to make lower monthly payments based on their income and family size, according to the lawsuit. They also provide for loan forgiveness after at least 25 years of repayments.

As another part of its strategy, PHEAA allegedly improperly placed borrowers making timely loan payments into deferment or forbearance status, artificially increasing revenue and extending the duration of loans in the Public Service Loan Forgiveness and IDR programs.

If you have a student loan serviced by the PHEAA and would like to discuss your legal rights, please contact us.

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