CRIME: Loan Servicer Agrees To Pay Nearly $8 Million To Resolve Alleged False Claims In Connection With Federal Education Loans

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Conduent Education Services LLC, fka Xerox Education Services LLC, dba ACS Education Services LLC (CES), a contractor that serviced student loans for lenders under the Federal Family Education Loan Program (FFEL), has agreed to pay $7.9 million to resolve allegations that it violated the False Claims Act by submitting or causing the submission of false claims to the Department of Education. CES had previously paid $1.4million to the Department of Education as part of a remediation plan. This payment was credit under the settlement agreement.

Loan servicers must accurately report to the Department of Education the impact of student loan repayments, principal capitaization, and other changes on borrower accounts. Today’s settlement resolves allegations that 2006 and 2016, failed to make the required financial adjustments to borrower account and incorrectly considered some borrowers eligible for military deferments. This led to inaccurate reporting to the Department of Education, as well as losses to the United States. In September 2019., CES stopped servicing federal student loans that were commercially owned.

The United States expects servicers who participate in federal loan programs, to accurately report amounts owed the Department of Education,” stated Acting Assistant Attorney General Brian M. Boynton of Justice Department’s Civil Division. “The department’s commitment is to pursue entities that fail to fulfill their obligations to the United States .”

“Since holding loan servicers accountable for non-payment of the United States is a top priority under the Biden–Harris Administration, I am happy that Conduent Education Services received the oversight and investigation it needed,” stated James Kvaal, Under Secretary of Education. “We are grateful that the Department of Justice worked with the Education Department in order to hold CES accountable to borrowers

The resolution to this matter was achieved through an investigation by the Justice Department’s Civil Division Commercial Litigation Branch Fraud Section with the support of the Department of Education’s Federal Student Aid and General Counsel offices.

The claims that were settled are allegations and no liability has been established.

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