(AP & WXXI News) New York state officials say they've reached a $9 million settlement with a federal student loan servicing company accused of harmful practices.
Attorney General Letitia James and Financial Services Superintendent Maria Vullo say the the settlement was reached with ACS Education Services, known as Conduent Education Services.
Officials say the company violated federal and state laws by steering struggling borrowers into temporary pauses in loan payments instead of directing them to income-based repayment programs.
Conduent will pay a $1 million fine and $8 million in restitution to about 55,000 New Yorkers impacted by the company's practices.
Officials say most eligible borrowers will receive between $100 and $450.
Conduent is a New Jersey based company which also has some operations in the Rochester area. It once had been part of Xerox, but was spun off as a separate company in 2017.
Conduent left the student loan business last October.
The company issued this statement:
"We have entered into a settlement agreement with the New York State Attorney General’s Office and the New York Department of Financial Services stemming from investigations initiated in 2014 and 2015, prior to Conduent’s separation from Xerox Corporation. The investigation centered on loan servicing activities going back into the 1990s. As previously communicated in our public disclosures, the company decided to exit the student loan servicing business and completed its exit from this business in October 2018. The company, which has neither admitted nor denied liability, is pleased to put these legacy issues behind it.”
