Bombshell Report Claims World’s Largest Student Loan Company Misled Student Loan Borrowers

A new bombshell report claims that this student company misled student loan borrowers.

Here’s what you need to know — and what it means for your student loans.

Student Loans

A new report released by the Communications Workers of America (CWA) and the Student Borrower Protection Center (SBPC) says their investigation into “the world’s largest student loan company” has uncovered new evidence of “systemic mismanagement, failure, and abuse.” The investigation claims that Maximus, which is a student loan servicer for 13 million federal student loan borrowers and operates under the name “Aidvantage,” allegedly engaged in the following:

• Sloppy student loan servicing. Student loan borrowers have reported being unable to access their new Aidvantage accounts online, receiving inaccurate information when asking when federal student loan payments will restart, and missing paperwork when their student loans were transferred from their previous student loan servicer.
• Unfair student loan debt collection. Low-income student loan borrowers have sued Maximus and alleged that Maximus violated student loan borrowers’ rights for their student loans in default.
• Unlawful wage garnishment and improper seizure of public benefits. Other litigation against Maximus alleges that Maximus improperly seized wages, Social Security, tax refunds and other public benefits for student loan borrowers who were in student loan default.

(Biden will cancel $6.2 billion of student loans)

In response to their investigation, CWA and SBPC launched AidvantageWatch, a project to spotlight alleged misconduct by Maximus and to ensure fair treatment for all student loan borrowers. Borrowers can visit AidvantageWatch online to share their experience with Maximus/Aidvantage and to learn how to alert regulators and enforcement officials if they encounter deceptive or misleading conduct by the student loan company.

“This report contains multiple significant errors of fact and context that mischaracterize the work we do for the FSA, including inaccurately describing the number and nature of consumer complaints about our student loan servicing work and falsely asserting that we are a student debt collector,” Maximus spokesperson Eileen Cassidy Rivera said. “We are not.”

According to Rivera, Maximus disputes several claims made in the report, including that Maximus:

• shouldn’t be called a student loan servicing company, but a “government contractor that provides back-office services for the government”;
• does not perform student loan debt collection and does not make the rules that determine when a student loan is in default; and
• doesn’t set the rules or policy for garnishment or seizure for student loans in default.

Maximus also denies they engaged in “sloppy student loan servicing.” “This is false,” Rivera said. “The 99 complaints filed with the Consumer Finance Protection Bureau (CFPB), cited in the report, out of more than 6.9 million student borrower accounts, paint an untrue and unfair picture of Aidvantage. Half of the complaints have nothing to do with Aidvantage or what is in Aidvantage’s control. None of the complaints point to Aidvantage not being ready for return to repayment on May 2. Most importantly, all of the complaints have been resolved.”

(Biden could extend the student loan payment pause forever)

According to the report, Maximus holds nearly $800 million of contracts with the U.S. Department of Education. In addition to serving as a student loan servicer, the report claims that Maximus has managed the Debt Management Collections System, which is used by student loan borrowers in default. Maximus also has managed call centers that help student loan borrowers in default, known as the U.S. Department of Education Default Resolution Group. Finally, through its role as a Business Process Operations vendor for the Office of Federal Student Aid, Maximus answers questions about student loans and student loan repayment.

(Biden could deliver both an extension of the student loan payment pause and student loan cancellation this year)

Student loans: how to file a complaint against your student loan servicer

Student loan borrowers should be treated fairly by their student loan servicers. This year, there’s a good chance you could get a new student loan servicer. Several leading student loan servicers ended their contracts with the U.S. Department of Education at the end of last year. If you have been wronged by your student loan servicer — the company that manages your student loans and collects student loan payments — then you can file a written complaint with at least one of the following:

• your student loan servicer
• the U.S. Department of Education
• your state’s attorney general
• Consumer Financial Protection Bureau (CFPB)
• Federal Trade Commission (FTC)

(Student Loan Cancellation Doesn’t Mean What You Think It Means)

Student loans: next steps

Federal student loan payments are scheduled to restart on May 1, 2022. It’s possible that President Joe Biden could extend the student loan payment pause again. However, there is no guarantee. Therefore, you should prepare now for the return of student loan repayment. It’s essential to learn all the best ways to pay off student loans faster and save money.

Here are smart places to start:

• Student loan refinancing (lower interest rate + lower payment)
• Income-driven repayment (lower payment)
• Student loan forgiveness (federal student loans)

Student Loans: Related Reading

Biden will cancel $6.2 billion of student loans

Biden could extend the student loan payment pause forever

6 major changes to student loan forgiveness

Student loan refinancing rates just got ridiculously cheap

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