Jan. 5 (UPI) — The Biden Administration announced Friday that it is withholding payments to three student loan companies that have failed to comply with their obligations to provide borrowers with “timely billing statements.”
Aidvantage, EdFinancial and Nelnet “failed to meet contractual obligations,” the Department of Education said in a press release Friday.
“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,” U.S. Secretary of Education Miguel Cardona said in the release.
The DOE said 758,000 borrowers from the three companies were affected when they did not receive timely notice of their bills.
In response to the errors, the DOE has withheld $2 million from Aidvantage, $161,000 from EdFinancial and $13,000 from Nelnet, in proportion to how many borrowers were affected.
The companies have been ordered to place affected borrowers in administrative forbearance, which means they will not owe payments until the issue is resolved.
The loans will be set at near 0% interest while in administrative forbearance and the months spent in forbearance will count toward Public Service Loan Forgiveness.
“We are committed to providing a seamless repayment experience for borrowers,” said Federal Student Aid Chief Operating Officer Rich Cordray.
