Student loans

Aidvantage racks up consumer complaints about its federal student loan service

Although the complaints represent only a small fraction of the company’s accounts, consumer advocates fear this is a foreshadowing of things to come. They say if people have problems while federal student loan payments are suspended, what happens when they resume?

“We are very concerned,” said Persis Yu, director of policy and counsel at the Student Borrower Protection Center, an advocacy group. “The company is taking over a large portfolio of student loans at a time when borrowers are particularly vulnerable. And there is a real question of whether they are prepared.

Maximus spokeswoman Eileen Cassidy Rivera said the complaints filed with the CFPB had been addressed. Maximus has a unit dedicated to identifying inconsistencies in service to borrowers and developing strategies to address them. The company says it monitors customer interactions for quality assurance.

“The 99 complaints lodged with the [CFPB] …on more than 6.9 million student borrower accounts paint a false and unfair picture of Aidvantage,” Rivera said. “Half of the complaints have nothing to do with Aidvantage or anything under Aidvantage’s control. None of the complaints indicate that Aidvantage is not ready for the return to reimbursement on May 2.

Aidvantage is entering a new role at a critical time for the Department for Education.

The agency is preparing for 41 million people to resume repayment in May, two years after the federal government suspended collection of most student loans following the pandemic. Several of its loan officers call it out, and lawmakers fear their departures could be disruptive as borrowers migrate to the system.

The department has also taken a tougher stance in holding loan managers accountable for their performance under Richard Cordray, who heads the office of federal student aid. The former CFPB director developed a reputation for aggressive enforcement at the office. As a result, industry and advocacy groups are closely watching how the FSA treats its contractors.

In this context, the complaints lodged with the CFPB against Aidvantage are examined. They are noted in a report published Friday by the Student Borrower Protection Center accusing Maximus, the parent company of Aidvantage, of mismanagement.

Maximus, which provides back-end support for the Department of Education’s delinquent loan portfolio, said the report is inaccurate and grossly misrepresents its business. The company only follows the direction of the department on collection matters and has no say in determining whether the federal agency should pursue defaulting borrowers, as the report suggests, Maximus’ Rivera said.

In addition to the CFPB complaints, the report includes an Aidvantage billing statement that a borrower received in January, requesting payment the following month, but by then the Biden administration had extended the payment break until in May. Another notice obtained from an Aidvantage customer also featured the incorrect end date of the moratorium a few weeks after the administration announced the change.

In a statement to The Washington Post, Cordray of the Department of Education said the federal agency was reviewing the examples provided in the report and would work with Aidvantage to address them.

“All borrowers should be able to count on accurate and timely information about their student loans,” Cordray said. “That’s why the FSA renewed its partnerships with federal and state regulators, removed barriers to state oversight by clarifying federal preemption rules, and negotiated new liability terms in our recent contract extensions. .”

The Department of Education said it was working with the services to address any harm to borrowers and to implement a plan to prevent recurrences. If a manager fails to meet performance standards, the FSA may withhold payment or allocate less to new accounts.

When asked if the department had received any complaints about Aidvantage, the agency said it had and had reviewed those lodged with the CFPB.

The CFBP confirmed that the complaints about Aidvantage’s federal student loan service had been closed, but could not provide additional information on the specific resolutions.

“Since last year, we have expressed our serious concerns about service outages as millions of borrowers see their loans transferred to a new service,” CFPB spokesman Michael Robinson said in an email. -mail. “We have been and will continue to hold the student loan industry accountable.”

Liberal lawmakers and advocacy groups criticized Maximus and questioned the department’s endorsement of its deal with Navient.

The Consumer Law Center, where Yu previously worked, and Justice Catalyst Law sued Maximus in 2020, accusing him of not stopping to collect on a delinquent borrower despite the department’s moratorium.

In November, a group of Senate Democrats, led by Sen. Elizabeth Warren (D-Mass.), wrote Maximus chief executive Bruce L. Caswell raised concerns about perceived conflicts of interest and wondered how the company would ensure a smooth transition for borrowers.

“It is critically important that your business operates at a high level and with increased transparency to provide the best possible service to borrowers and end a history of loan officer abuse,” the senators wrote.

In response to the letter from Congress, Caswell assured that the company provides “independent and conflict-free service to government clients.” The Department of Education pays its loan servicers more for accounts in good standing than for those in default, thereby easing a financial incentive to let borrowers fall behind.

Caswell also said Maximus added experienced staff, improved training and worked closely with the department on a comprehensive communications plan.

“Maximus appreciates the trust the FSA has placed in us to serve student borrowers,” Caswell wrote. “We look forward to meeting the Department of Education’s highest standards of performance, transparency and accountability by providing the stability and quality of service that student borrowers deserve.” »