Explosive Report Claims This Student Loan Service Deceived Student Loan Borrowers
A bombshell new report claims this student company misled student borrowers.
Here’s what you need to know and what it means for your student loans.
A new report released by the Communications Workers of America (CWA) and the Student Borrower Protection Center (SBPC) says their investigation into “the world’s largest student loan company” has uncovered new evidence of “mismanagement, failure and systemic abuse”. The investigation claims that Maximus, which is a student loan servicer for 13 million federal student loan borrowers and operates under the name “Aidvantage,” allegedly participated in the following:
- Botched student loan service. Student loan borrowers reported being unable to access their new Aidvantage accounts online, receiving inaccurate information when asking when federal student loan repayments will resume, and missing documents when their student loans were transferred from their previous manager student loans.
- Unfair collection of student loan debt. Low-income student borrowers sued Maximus and alleged that Maximus violated the rights of student borrowers for their defaulted student loans.
- Illegal seizure of wages and abusive seizure of public benefits. Another lawsuit against Maximus alleges that Maximus improperly garnished wages, Social Security, tax refunds and other public benefits for student borrowers who were in default.
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In response to their investigation, CWA and SBPC launched AidvantageWatch, a project aimed at exposing alleged misconduct by Maximus and ensuring fair treatment for all student borrowers. Borrowers can visit AidvantageWatch online to share their experience with Maximus/Aidvantage and learn how to alert regulators and enforcers if they encounter misleading or deceptive student loan company behavior.
“This report contains several material errors of fact and context that misrepresent the work we do for the FSA, including misrepresenting the number and nature of consumer complaints about our Student Loans servicing work and asserting to wrong that we’re a student debt collector,” Maximus spokeswoman Eileen Cassidy Rivera said. “We are not.”
According to Rivera, Maximus disputes several claims made in the report, including that Maximus:
- should not be called a student loan servicing company, but a “government contractor that provides administrative services to government”;
- does not collect student loan debts or establish the rules that determine when a student loan is in default; and
- does not establish garnishment or garnishment rules or policy for student loans in default.
Maximus also denies that they engaged in “botched student loan service.” “That’s wrong,” Rivera said. “The 99 complaints filed with the Consumer Finance Protection Bureau (CFPB), cited in the report, over more than 6.9 million student borrowing accounts, paint a false and unfair picture of Aidvantage. Half of the complaints have nothing to do with Aidvantage or anything under Aidvantage’s control. None of the complaints indicate that Aidvantage is not ready for the return to reimbursement on May 2. More importantly, all complaints have been resolved.
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According to the report, Maximus has nearly $800 million in contracts with the US Department of Education. In addition to serving as a student loan agent, the report claims that Maximus managed the debt management collection system, which is used by defaulting student borrowers. Maximus also operated call centers that help student borrowers in default, known as the US Department of Education Default Resolution Group. Finally, through its role as a business process operations provider for the Office of Federal Student Aid, Maximus answers questions about student loans and student loan repayment.
(Biden could offer both an extended student loan payment pause and student loan forgiveness this year)
Student Loans: How to File a Complaint Against Your Student Loan Servicer
Student borrowers should be treated fairly by their student loan servicers. This year, chances are you’ll find a new student loan manager. Several prominent student loan servicers terminated their contracts with the US Department of Education late last year. If you have been wronged by your student loan officer – the company that services your student loans and collects student loan payments – you can file a written complaint with at least one of the following people:
- your student loan manager
- the United States Department of Education
- your state attorney general
- Consumer Financial Protection Bureau (CFPB)
- Federal Trade Commission (FTC)
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Student loans: next steps
Federal student loan repayments are expected to resume on May 1, 2022. President Joe Biden may extend the student loan payment pause again. However, there are no guarantees. Therefore, you need to prepare now for the return of student loan repayment. It’s essential to learn all the best ways to pay off student loans faster and save money.
Here are some smart places to start: