Demanding Justice in the Bluegrass State
This post originally appeared on www.protectborrowers.org
Today, the Student Borrower Protection Center partnered with the Kentucky Equal Justice Center (KEJC) to support Attorney General Beshear’s fight to protect student loan borrowers.
In 2018, Attorney General Beshear began investigating the servicing of student loans owned by the National Collegiate Student Loan Trusts (NCSLT). These Trusts are notorious for shoddy record-keeping, meaning that servicers and collectors pursue borrowers for debt that they can’t prove are owed. In fact, an internal audit of NCSLT loans found that “a random sample of nearly 400 National Collegiate loans found not a single one had assignment paperwork documenting the chain of ownership.” Attorneys general across the country have started similar investigations as they work to protect the borrowers victimized by “the worst-performing student loan investment vehicles ever created by Wall Street.”
And the company responsible for servicing these student loans—sending out all of the bills, receiving payments, computing interest, and applying people’s payments—is the Pennsylvania Higher Education Assistance Agency (PHEAA), also known as American Education Services. PHEAA is one of the largest student loan servicers in the country and handles over $425 billion in student loan debt owed by millions of consumers nationwide. In fact, one out of every ten dollars of non-mortgage consumer debt in the country is handled by PHEAA. And yet, in Kentucky and around the country, PHEAA is arguing that it is above the law.
Seth Frotman is the Executive Director of the Student Borrower Protection Center. He previously served as the Assistant Director and Student Loan Ombudsman at the Consumer Financial Protection Bureau.
Ben Carter is the Senior Litigation and Advocacy Counsel at Kentucky Equal Justice Center. KEJC is a non-profit poverty law advocacy center.