November 29, 2016
The OEM’s Education Services sector “allegedly harassed borrowers and mishandled federal loan relief efforts”.
In 2009 Xerox acquired a loan company, ACS, and through its Education Services (XES) sector has been lending to students, reported Consumer Affairs, but in the last year XES has been investigated for “allegedly violating debt collection laws and overcharging borrowers”, now settled out of court with the $2.4 million (€2.2 million) payment.
The investigation began in 2015 after the loan servicing practices were analysed and found to have failed to “properly process applications for federal loan relief”, which is related to the “Income-Based Repayment Plan under the Higher Education Act”, resulting in borrowers being “forced to pay more than they needed to on their debt”, and when they could not manage the payments they were charged with late fees.
The company was also charged with “violating debt collection regulations” by numerous repeated phone calls, and for not investigating “credit report disputes”, which led to credit agencies being given false information. XES has agreed to pay $2.4 million to the state of Massachusetts, and $400,000 (€377,240) of this will be used as compensation for 800 borrowers, who despite trying to apply for relief were unable to enrol.
XES has also agreed to “credit late fee overcharges, reform service members’ accounts, stop its illegal debt collection practices, and establish a “Borrower Advocacy Group” that will help loan recipients apply for income-based repayment plans”.
Maura Healey, Massachusetts Attorney General, said: “To address this student debt crisis, we need students to be on repayment plans that will help them succeed, not fall further into debt. ACS failed to meet this standard and regularly undermined the opportunity for students to access appropriate repayment plans. This conduct increases the already high cost of education, damages credit, and prevents students and their families from achieving long-term economic security.”
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