SEATTLE, Nov. 25, 2014 (GLOBE NEWSWIRE) -- Attorney Advertising. Keller Rohrback L.L.P. is investigating claims relating to unfair and deceptive practices by student loan servicers. As identified by the Consumer Financial Protection Bureau (CFPB), student loan servicers have been engaging in illegal billing and collection practices that are affecting millions of borrowers and crushing what once was the "American Dream" for higher education.
- Allocating payments to maximize late fees: Often, servicers handle multiple student loans for each borrower in one combined account. Servicers allow borrowers to make a single payment for all of the loans, and then the servicer allocates the payment among the borrower's loans to satisfy the monthly payment for each loan. Where the borrower makes a payment less than the total amount due, CFPB examiners found that one or more servicers allocated the amounts in a manner that resulted in borrowers getting charged a minimum late fee on all of their loans and all of their loans becoming delinquent.
- Misrepresenting minimum payments: CFPB examiners found that one or more student loan servicers inflated the minimum payment that was due on periodic statements and online account statements. These inflated numbers included amounts that were in deferment and not actually due.
- Charging illegal late fees: CFPB examiners found one or more student loan servicers were unfairly charging late fees when payments were received during the grace period. Like many other types of loans, many student loan contracts have grace periods after the due date. If a payment is received after the due date, but during the grace period, the promissory note states that late fees would not be charged.
- Failing to provide accurate tax information: CFPB examiners found cases where student loan servicers failed to provide consumers with information essential for deducting student loan interest payments on their tax filings. The servicers impeded borrowers from accessing this information and misrepresented information on the consumers' online account statements. This practice may have caused some consumers to lose up to $2,500 in tax deductions.
- Misleading consumers about bankruptcy protections: CFPB examiners found that some servicers told consumers student loans are not dischargeable in bankruptcy. While student loans are more difficult to discharge in bankruptcy than most other types of loan, it is possible if the borrower affirmatively asserts and proves "undue hardship" in a court. Servicer communications with borrowers asserted or implied that student loans were never dischargeable.
- Making illegal debt collection calls to consumers, at inconvenient times: Examiners found that one or more student loan servicers routinely made debt collection calls to delinquent borrowers early in the morning or late at night. For example, examiners identified more than 5,000 calls made at inconvenient times during a 45-day period, which included 48 calls made to one consumer.
Although not an exhaustive list, Keller Rohrback is currently investigating the following student loan servicers for potential student loan servicing violations, such as those outlined above:
Navient Corporation (formerly Sallie Mae)
AES/PHEAA (commonly referred to as AES or FedLoan Servicing)
Student loan servicers are companies that collect payments on a loan, respond to customer service inquiries, disburse loans, process loan deferrals and forbearances, maintain loan records, and work with struggling borrowers to find repayment options.
If you would like more information regarding Keller Rohrback's student loan servicing investigation, please contact attorney Amy Williams-Derry or paralegals Anne Hertel or Daniel Lenentine via email or at 800.776.6044.
Keller Rohrback, with offices in Seattle, Phoenix, New York, and Santa Barbara, has over 85 years of experience successfully representing consumers against America's top corporations. Among Keller Rohrback's attorneys are accountants, economists, computer technology experts, and former U.S. Justice Department prosecuting attorneys. We are committed to helping those harmed by anti-consumer practices, and have achieved multimillion dollar results on behalf of classes of plaintiffs.
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