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Phil Weiser

Colorado Attorney General

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Colorado sues student loan servicer that runs Public Service Loan Forgiveness program to force it to comply with state consumer protection laws

May 26, 2021 (DENVER)—Attorney General Phil Weiser today announced that his office sued the student loan servicer that handles the federal Public Service Loan Forgiveness program, Pennsylvania Higher Education Assistance Agency, after it refused to fully comply with state law requiring consumer protection oversight.

PHEAA, which does business as FedLoan Servicing and AES, is the exclusive servicer for the PSLF program that Congress created in 2007 to encourage graduates to work in public service. The program offers loan forgiveness to direct loan borrowers who make 120 qualifying payments while employed in public service. Under its mandate from Congress, the program was designed to enable borrowers who work in the nonprofit or government sector to pay their loans for 10 years and then have the remaining balance forgiven.

Under the administration of PHEAA, implementation of the program has been beset with problems, including extremely low approval rates for forgiveness and misinformation about whether borrowers were in the right kind of repayment plan or had the right kind of loans.

In 2019, the Colorado legislature authorized the attorney general’s office to license student loan servicers and ensure their compliance with consumer protections. PHEAA obtained a Colorado license. The attorney general then requested records related to PHEAA’s handling of the PSLF program during the COVID-19 pandemic. PHEAA refused to produce them, only agreeing to provide limited documents regarding non-government owned loans related to its AES business line.

“Dedicated Colorado public servants such as teachers, firefighters, and nurses are entitled to participate in the Public Service Loan Forgiveness program and deserve the protections afforded to them by Colorado law,” said Weiser. “State oversight, like that outlined in the Colorado Student Loan Servicers Act, is necessary to ensure student loans servicers like PHEAA comply with the law. PHEAA must comply with these requirements and we will work to enforce the law and stand up for student borrowers.”

The lawsuit, filed in Denver District Court, requests a temporary and permanent injunction that PHEAA comply with the attorney general’s oversight authority.

The Colorado Student Loan Servicers Act also created a student loan ombudsperson in the attorney general’s office as a resource for student loan borrowers throughout the state. The ombudsperson is responsible for receiving, reviewing, and attempting to resolve complaints from student loan borrowers.  Borrowers struggling with their student loans can click here to file a complaint with the student loan ombudsperson.

Student loan borrowers can click here to learn more about the requirements of the PSLF program.

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Media Contact:
Lawrence Pacheco
Director of Communications
(720) 508-6553 office | (720) 245-4689 cell
Lawrence.pacheco@coag.gov

Student Loan Servicers: Information for Consumers

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Office of the Attorney General
Colorado Department of Law
Ralph L. Carr Judicial Building
1300 Broadway, 10th Floor
Denver, CO 80203

(720) 508-6000

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