Stronger Accountability for Federal Student Loan Servicers and Borrower Protection.
This law establishes stricter standards for companies managing federal student loans to shield borrowers from administrative errors. It mandates that servicers provide financial remedies, remove negative credit reporting entries caused by their mistakes, and ensure errors do not delay progress toward loan forgiveness. The changes aim to improve customer service quality and increase transparency in the operations of these companies.
Key points
If a servicer makes an error, the loan must be placed in interest-free administrative forbearance, and this time counts toward loan forgiveness programs (PSLF/IDR).
Servicers must reimburse borrowers for financial harm caused by errors, including refunding overpayments and fees like insufficient funds charges.
Negative credit information (delinquencies) resulting from a servicer error must be removed from the borrower's credit report.
New contracts require enhanced vetting of servicers based on consumer satisfaction, error prevention, and ability to support diverse borrowers, including multi-language services.
Expired
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