Stronger Accountability for Student Loan Servicers and Enhanced Borrower Protection.
This Act establishes stricter rules for companies managing federal student loans, requiring them to fix errors without penalizing borrowers. This means administrative mistakes will no longer cause borrowers to lose progress toward loan forgiveness or suffer negative credit report entries. If a servicer makes an error, borrowers must receive refunds for overpayments and reimbursement for fees incurred due to the mistake, protecting their personal finances.
Key points
If a servicer makes an error, the loan must be placed in interest-free administrative forbearance, and the borrower retains credit toward loan forgiveness (e.g., PSLF/IDR).
Servicers must remove negative credit reporting entries caused by their errors and reimburse borrowers for financial harm, such as bank fees or overpayments.
New contracts require enhanced vetting of servicers based on consumer satisfaction, quality of service, and history of penalties or legal actions.
Expired
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