by Alyssa Andrews
My student loans will kick in six months after I graduate in December 2015 and I don’t look forward to the payments. I think I know what I will have to shell out every month and that will give me some feeling of control. But what if the student loan servicer overcharges and I have to pay more than what’s already calculated?
Discover Bank and its student loan affiliates, the Student Loan Corporation and Discover Products, Inc. allegedly misled people on their statements and overcharged more than 100,000 borrowers, according to the Consumer Financial Protection Bureau (CFPB).
The CFPB found that Discover Bank companies overstated the minimum amounts people owed, failed to give people critical information they needed to file income tax returns, and then harassed borrowers to collect money.
The CFPB ordered the company to pay a $2.5 million penalty and repay borrowers $16 million. Again, no one goes to prison here, but at least those who borrowed and found themselves caught in this financial morass will get some compensation.
Problems began to occur for borrowers in 2010 after Discover bought about 800,000 student loans from Citibank.
The CFPB says, “Discover failed at providing the most basic functions of adequate student loan servicing for a portion of the loans that were transferred from Citibank.”
In addition to the monetary penalties, Discover now must clean up its act and send accurate statements that represent the precise amount people owe. The CFPB also ordered the companies to stop making collection phone calls before 8 a.m. or after 9 p.m.
We haven’t see the details of how people will get the refunds, but you can expect to hear from the company. If you don’t, contact the Consumer Financial Protection Bureau.