DENVER (CBS4) – The Colorado attorney general’s office on Wednesday filed a lawsuit against a Pennsylvania-based company accused of operating a federal student loan forgiveness program. The lawsuit seeks temporary and permanent injunctions forcing the company, Pennsylvania Higher Education Assistance Agency (PHEAA), to provide documentation in accordance with national consumer protection legislation.
the Public service loan forgiveness program (PSLF) was established by Congress in 2007. It provides debt relief to graduates who are now working full time in public service jobs such as nurses, teachers, firefighters, or the military. Employees of non-profit entities are also eligible.
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PHEAA, the Colorado attorney general’s office said in a Press release, is solely responsible for the PSLF program.
The Colorado State Legislature passed the Colorado Student Act in 2019. With her, a post of Student Loans Ombudsman was created within the Attorney General’s Office to deal with complaints from student loan borrowers. This person, Martha Fulford, administrator of the Uniform Consumer Credit Code, is identified in the lawsuit as her complainant.
The PHEAA applied for and received a license to operate in Colorado in the same year.
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But the PHEAA has since refused to produce “the requested files related to the management by the PHEAA of the PSLF program during the COVID-19 pandemic”, indicates the press release of the AG. “PHEAA refused to produce them, agreeing only to provide limited documentation regarding non-government loans.”
A spokesperson for PHEAA told CBS4 on Friday that the requested information had not been approved for release by the US Department of Education within the five business days demanded by the Colorado AG office. PHEAA “therefore had no choice but to submit its objections to the production of this data belonging to the federal government“, explained Kevin New of PHEAA. He added that Colorado Attorney General Phil Weiser had been included in “direct discussions” over the lack of permission.
“The PHEAA reminded the Colorado attorney general’s office,” New continued, “of the existence of three separate federal trial court decisions that have ruled that state licensing laws do not apply to federal student loan contractors; and the Colorado state licensing law expressly states that licensees are not obligated to respond to requests that do not comply with federal law. “
CBS4 contacted the US Department of Education on Friday afternoon. A person with direct knowledge of the conflict was not available at the time. This story will be updated with any response.
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