Podcast Center
Video Center
Webcasts
Resource Center
Events
September 19, 2017 at 11:59 AM
Almost three weeks after the Department of Education stopped sharing information with the Consumer Financial Protection Bureau, the bureau has ordered Collegiate Student Loan Trusts and its debt collector Transworld Systems to pay $21 million in fines and restitution for illegal debt collection lawsuits.
It was the agency’s second action involving questionable student loan practices in the past month.
(Related: CFPB Seeks $183M From Lender Over Corinthian College Loan Scheme)
In July the CFPB ordered Aequitas Capital Management to refund $183.3 million to 41,000 students for predatory loans they had received to attend the now defunct, for-profit Corinthian Colleges. Federal courts must rule on the proposed judgments in both cases before they can take effect.
(Related: How Student Loan Companies Are Causing More Defaults)
In the latest case, “the National Collegiate Student Loans Trusts and their debt sued consumers for student loans they couldn’t prove were owed and filed false and misleading affidavits in courts across the country,” said CFPB Director Richard Cordray in a statement.
(Related: New York Cracks Down on Student Loan Fraud, Abuse)
The agency ordered the Trusts to pay $7.8 million to the U.S. Treasury, $7.8 million to the bureau’s Civil Penalty Fund and at least $3.5 million in restitution to more than 2,000 students who made payments after being sued by the Trusts for loans where documentation was missing or the statute of limitations had expired. (The $3.5 million restitution could grow if more students are identified in lawsuits involving loans that lack documentation or have exhausted statute of limitations.)
