Washington to take action against student loan servicers

By V.S. Santoni The Biden-Harris Administration has announced the withholding of payments to three student loan servicers, Aidvantage, EdFinancial, and Nelnet, due to their failure to meet contractual obligations. These companies neglected to send timely billing statements to a total of 758,000 borrowers during the initial repayment month. As a consequence, the Department of Education is withholding $2 million from Aidvantage, $161,000 from EdFinancial, and $13,000 from Nelnet. U.S. Secretary of Education Miguel Cardona emphasized that the administration will not tolerate poor performance from student loan servicers, asserting a commitment to aggressive oversight and prioritizing borrower interests. To address the impact on affected borrowers, the Department directed each servicer to place them in administrative forbearance until the issues are resolved. This temporary relief ensures that borrowers do not owe payments, and any accrued interest will be adjusted to zero. Moreover, months spent in administrative forbearance will count towards Public Service Loan Forgiveness or income-driven repayment forgiveness. The Department’s actions are part of ongoing efforts to hold servicers accountable and protect borrowers. Previously, $7.2 million was withheld from MOHELA for similar billing statement issues affecting 2.5 million borrowers. Federal Student Aid Chief Operating Officer Rich Cordray emphasized the commitment to providing...