When you think of Xerox, photos of large, office printers is likely the first thing to come to mind. But it turns out the company also dabbles in the education business. And it’s that venture that federal investigators are probing after discovering nearly a decade of errors.
Xerox Education Services, which manages more than two million federally backed loans on behalf of big banks like Wells Fargo and JPMorgan Chase, notified the financial institutions in September that it was working with regulators on plans to address more than a decade of errors in its student loan servicing business, including some in which the company overcharged borrowers.
The investigation was first disclosed this week in a quarterly filing [PDF] from JPMorgan Chase, which detailed that the “Department of Education and the Consumer Financial Protection Bureau approved a remediation plan to address outstanding servicing issues.”
BuzzFeed News, citing someone close to the matter, reports that the CFPB continues to operate an open investigation into Xerox Education Services.
According to Chase’s 2015 third quarter filing, in December 2014, Xerox Education Services informed the bank that it had failed to properly make certain financial adjustments for some federally backed private student loan accounts it services.
“XES informed us that it believes the issue affects only a small percentage of borrowers whose loans it services and estimates that the aggregate amount of the adjustments is not more than 0.2% of the principal balance of all of the FFELP (Federal Family Education Loan Program) loans XES services for its customers,” the report states.
Xerox’s student loan servicing issues – including miscalculating payments and overcharging some borrowers – go back as far as 2006 and went unaddressed and unreported until 2014, BuzzFeed News reports.
Before 2010, private lenders made provided most federal student loans to borrowers though the Federal Family Education Loan Program (FFELP).
Under the program, loans (Federal Stafford, PLUS, and Consolidation Loans) were made through a public/private relationship involving borrowers, schools, lenders, and the federal government; private lenders (such as local banks or credit unions) provided the money for the loans and the federal government subsidized and reinsured the loans
While that program has since ended, many borrowers still owe the balances on their loans. A recent report from the CFPB found that many borrowers who have outstanding FFELP loans are more likely to default and have more difficulty working with companies who service the debts.
Until 2013, Xerox Education Services held a contract with the Dept. of Education to manage about $140 billion in direct student loans. According to officials with the Department, the contract wasn’t renewed because of the company “improperly handled” the servicing of the loans, BuzzFeed reports.
A spokesperson for Xerox tells BuzzFeed that the company “regrets any inconvenience” stemming from its servicing issues, noting that the company is “taking proactive action” to address the problem by notifying borrowers and correcting the inaccurate balances.
Xerox Under Federal Investigation Over Student Loan Business [BuzzFeed News]
by macaleo kalkins via bugreg mobile version site
in vladimir
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