UNITED STATES
The controversy surrounding the US Public Service Loan Forgiveness Program has taken another turn, with the State of New York announcing it will sue one of the loan-servicing companies for mismanagement.
New York Attorney-General, Letitia James (pictured) said the action would be taken against the Pennsylvania Higher Education Assistance Agency, which operates under the name of FedLoan Servicing.
She accused it of haphazardly handling the Federal program that encouraged university graduates to enter fields serving the public good with the promise of having their student debt cancelled.
The program requires borrowers to make 120 loan payments while working in the public sector for 10 years to have their remaining balance forgiven.
Ms James alleged that FedLoan, which runs the program for the Education Department, had miscounted payments, provided inconsistent information and failed to inform borrowers of their right to appeal against mistakes.
“Those breakdowns in the administration of the program have contributed to a large number of rejected applications for loan forgiveness,” Ms James said, noting that fewer than 900 of the more than 90,000 applicants had their discharges approved and processed as of June.
“Despite a decade of honourable public service to our State and this nation, hard-working New Yorkers have been left with nothing but the run-around and broken promises.”
She said the company’s abuses had not only denied PS employees the benefits they had earned, but had undermined the goals of the loan forgiveness program.
The lawsuit seeks restitution for residents of the State it says were harmed by the loan servicer and discontinuation of those practices.
FedLoan said it disputed the claims made in the case and had made several unsuccessful attempts to meet the Attorney-General’s office and discuss the accusations.
The Attorney-General’s office said it was willing to meet the company but refused to delay the lawsuit.
New York, 5 October 2019
