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# Biden-Harris Administration Takes Additional Action to Hold Student Loan Servicers Accountable for Failing to Meet Contractual Obligations

# Biden-Harris Administration Takes Additional Action to Hold Student Loan Servicers Accountable for Failing to Meet Contractual Obligations

January 5, 2024

**Contact:  **press@ed.gov

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The  Biden-Harris Administration today announced it is withholding payments to three  student loan servicers as part of the U.S. Department of Education’s  (Department) continued efforts to strengthen protections for student loan  borrowers and hold servicers accountable. The Department has found that  Aidvantage, EdFinancial, and Nelnet all failed to meet contractual obligations  to send timely billing statements to a combined total of 758,000 borrowers for  the first month of repayment. As a result of identifying these errors, the  Department is withholding payment of $2 million from Aidvantage, $161,000 from  EdFinancial, and $13,000 from Nelnet - amounts based upon the number of  borrowers impacted by these errors.

“Today’s  actions make clear that the Biden-Harris Administration will not give student  loan servicers a free pass for poor performance and missteps that jeopardize  borrowers,” said U.S. Secretary of Education Miguel Cardona. “As millions of  Americans return to repayment, the Department of Education will continue to  engage in aggressive oversight of student loan servicers and put the interests  of borrowers first. When unacceptable errors are uncovered, servicers should  expect to be held accountable and borrowers should count on this administration  to hold them harmless.”

To  remedy the impact of these errors on borrowers, the Department directed each  servicer to place affected borrowers into administrative forbearance until the  issues were resolved. While their loans are in administrative forbearance,  borrowers will not owe payments and any accrued interest will be adjusted to  zero. Additionally, any months that borrowers spend in administrative  forbearance will count as progress toward Public Service Loan Forgiveness or  income-driven repayment forgiveness. The Department’s action will ensure that  borrowers are not harmed by these servicer errors and that servicers are held  accountable for their actions.

The  Department previously withheld $7.2  million from MOHELA for sending late or no billing statements to 2.5 million  borrowers.

“We  will not allow servicers to cause harm to borrowers as they resume making their  monthly payments,” Federal Student Aid Chief Operating Officer Rich Cordray said.  “We are committed to providing a seamless repayment experience for borrowers.  We will continue our strong oversight and efforts to hold servicers to their  contractual obligations and make sure borrowers are not harmed by these  errors.”

The  Department will continue its stringent oversight of servicers through our accountability  framework and takes this responsibility very seriously. These actions show that the  oversight has been effective in discovering mistakes when they happen, allowing  the Department to take corrective action where needed. The Department will  continue to monitor servicer performance and ensure they are meeting their  contractual obligations to the Department and providing accurate and timely  service to borrowers. If a servicer fails to meet these obligations, additional  action may be warranted by the Department.

In  addition, in an attempt to make sure borrowers are not penalized for late or  missed payments during the transition to repayment, the Department recently  sent a letter to credit  reporting agencies and credit scoring companies reminding them that borrowers’  current payment behavior is not necessarily indicative of an inability or  unwillingness to make payments.
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