Student loans and the impact they have on Americans and the economy have been ever-present in the news for years.  Many consider the current student loan system in place in the U.S. university system to be a crisis – one that threatens the economy and American democracy itself.  Whether you believe that or not, student loans have a major impact on a significant percentage of the adult population.  Just this week, it was announced that Navient, one of the largest student loan servicing companies in the United States, had reached a settlement with the governments of dozens of states to pay $1.85 billion to resolve allegations that it engaged in predatory practices that led to crippling student loan debt for thousands of students.

With that story dominating the news cycle, it is not surprising that another settlement reached by a student loan servicer has flown under the radar.  On January 14, the Department of Justice announced that it had reached a settlement with Conduent Education Services LLC (“CES”) (formerly known as Xerox Education Services LLC and doing business as ACS Education Services LLC), a student loan servicer contracted by lenders, resolving allegations that it violated the False Claims Act.  CES agreed to pay $7.9 million to resolve the allegations.  DOJ alleges that, between 2006 and 2016, CES failed to make adjustments to borrowers’ accounts as required by federal law.  It is also alleged that CES granted military deferments to borrowers when they were not actually eligible for those deferments.  These alleged acts led to inaccurate information being submitted to the Department of Education.

Prior to the settlement with DOJ, CES had paid $1.4 million to the Department of Education under a remediation plan.  That $1.4 million was credited toward CES’s settlement with DOJ.  The DOJ investigation and resulting settlement demonstrates that the False Claims Act is not merely a healthcare fraud statute.  It is, in fact, meant to address fraud of all types perpetrated against the United States government.  As elected officials continue to grapple with the impact of student loan debt on society and ways to alleviate the pressure on borrowers, expect the Department of Justice to continue to investigate allegations of fraud by student loan servicers and others involved in higher education finance, potentially leading to future settlements providing relief to borrowers similar to the recent Navient settlement.

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with white-collar criminal investigations, False Claims Act investigations, and qui tam litigation.  If you need assistance with such a matter, please contact us today.