Press Release  Major Student Loan Servicer Nelnet To Pay $1.8 Million For Alleged Failure To Sufficiently Communicate With Borrowers About Maintaining Access To Affordable Payments

BOSTON — Today, Attorney General Andrea Joy Campbell announced a $1.8 million settlement with Nelnet, Inc. (Nelnet), one of the nation’s largest federal student loan servicers, resolving allegations that the company failed to appropriately communicate with borrowers about renewing Income-Driven Repayment (IDR) plans that provide access to affordable payments.

Loan servicers like Nelnet handle billing and other services for federal student loans and are responsible for helping borrowers access more affordable payments through IDR plans. Under these plans, monthly payments are based on the borrower’s income and family size rather than their loan balance. IDR plans also offer the possibility of valuable interest benefits and loan forgiveness after the borrower makes qualifying payments for a certain number of years.  

To enroll in an IDR plan, borrowers must submit documentation of their income and family size to their loan servicer. To continue making income-driven payments, borrowers “recertify” their income and family size information each year. Borrowers must complete this recertification by the deadline established by their loan servicer. Federal regulations require, among other things, that servicers provide borrowers with at least sixty days’ notice of the recertification deadline. They also require servicers to explain the consequences if borrowers fail to recertify by the deadline, including the estimated amount to which the borrower’s monthly payment will increase and that unpaid interest may be added to the borrower’s loan balance. The AGO’s investigation found that many of Nelnet’s communications with borrowers between 2013 and 2017 failed to comply with these regulations and thus violated state consumer protection law.  

“Student loan servicers play a crucial role in ensuring that borrowers can access more affordable loan payments,” said AG Campbell. “As we continue to address issues of affordability, we will prioritize student loan debt and hold service providers accountable when they fail to fulfill their notification and information obligations to Massachusetts borrowers.” 

The settlement agreement requires Nelnet to pay $1.8 million to the Commonwealth, to comply with federal notice requirements relating to IDR plans, and to implement business practices that make it easier for borrowers to continue making more affordable income-driven payments.  

Federal loan borrowers who are struggling to afford their student loan payments are encouraged to explore the new more affordable IDR plan, called SAVE. Borrowers can use this chart to estimate their SAVE payments.  Borrowers can also visit the AGO’s website at mass.gov/ago/studentloans to learn more about repayment and debt relief options, including the U.S. Department of Education’s upcoming payment count adjustment for IDR plans and Public Service Loan Forgiveness (PSLF). Through this adjustment, borrowers with loans owned by the U.S. Department of Education will receive credit toward PSLF and IDR forgiveness for past repayment periods, even if they were not in a qualifying repayment plan. Borrowers with privately owned federal loans must apply to consolidate into the Direct Loan Program by April 30, 2024 to receive the payment count adjustment.   

This matter was handled by the Attorney General’s Insurance & Financial Services Division, including Deputy Director and Student Loan Ombudsman Arwen Thoman, Assistant Attorney General Madonna Cournoyer, Mathematician Burt Feinberg, and Division Chief Glenn Kaplan.  

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