The Bureau of Consumer Financial Protection (“CFPB”) and Conduent Education Services, LLC (“CES”), a student loan servicing company formerly operating as ACS Education Services, reached a $3.9 million deal for the company’s alleged failure to provide accurate balances on more than 200,000 student loans. 

The CFPB found that CES engaged in unfair practices that violated the Consumer Financial Protection Act of 2010 by failing to adjust in a timely manner principal balances of student loans made under the Federal Family Education Loan Program. CES did not make required adjustments to student loans to account for common circumstances such as deferment, forbearance, or the borrowers’ entrance into an income-based repayment plan. 

While CES could automatically process principal balance adjustments for most loans, certain adjustments apparently had to be processed manually by a loan processor. Those loans requiring manual processing were placed into queues for later processing and, in the interim, the affected loan remained unadjusted with potentially incorrect principal balances. Over the years, the queues grew to over 200,000 loans awaiting adjustment. As a result, borrowers paid off loans with inaccurate balances, and other borrowers were unable to consolidate their loans while they waited, sometimes for months, for CES to adjust their principal balances. 

The consent order requires CES to make adjustments to the principal balances of relevant loans or otherwise make restitution to borrowers or any third parties that paid off such loans. CES must also pay a $3.9 million fine. CES is in the process of winding down its business.