Report Calls Out Federal Student Loan Servicer for ‘Sloppy’ Work

A report released by the Student Borrower Protection Center and the Communication Workers of America is accusing one of the largest student loan servicers of a number of misdeeds, including unfair debt collection, unlawful wage garnishments, and “sloppy” student loan servicing.

The report calls out Maximus Federal Services, which is servicing student loans under the name Aidvantage. Servicing more than 13 million student loans, including all of the Education Department’s defaulted student loans, Maximus is the world’s largest student loan servicer, according to the report.

The company may have committed “millions” of violations of the Fair Debt Collection Practices Act, according to the report because it regularly fails to identify itself as a debt collector while also not providing required disclosures like the mini-Miranda notice.

Even though it has allegedly stipulated that it is a debt collector under the FDCPA, the company attempts to “hide” beneath a shield of “sovereign immunity” because of its status as a federal contractor, according to the report.

The report uses one lawsuit – Bodor v. Maximus – for many of the claims it makes in the report. In that case, the plaintiff’s tax refund was seized after she applied to have her federal student loans canceled through the Education Department’s Defense to Repayment program. That application should have halted any collection efforts, according to the report.

Companies like Maximus that are working on behalf of the federal government need to have a brighter line shone on them while also having “stronger accountability measures” implemented “to protect borrowers from private contractors prone to placing profit over the public good.”

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