DENVER (CBS4) — The Colorado Attorney General’s Office filed a lawsuit Wednesday against a Pennsylvania-based company charged with running a federal student loan forgiveness program. The lawsuit requests temporary and permanent injunctions forcing the company, Pennsylvania Higher Education Assistance Agency (PHEAA), to provide documentation in compliance with state consumer protection law.
The Public Service Loan Forgiveness program (PSLF) was created by Congress in 2007. It offers debt relief to graduates who now work full-time in public service jobs such as nurses, teachers, firefighters, or members of the military. Employees of non-profit entities also qualify.
PHEAA, the Colorado Attorney General Office claimed in a press release, is the sole servicer for the PSLF program.
The Colorado State Legislature passed the Colorado Student Servicers Act in 2019. With it, a student loan ombudsperson position was created within the attorney general’s office to address complaints from student loan borrowers. That person, Martha Fulford, the administrator for the Uniform Consumer Credit Code, is identified in the lawsuit as its plaintiff.
PHEAA applied for a license to operate in Colorado that same year, and received it.
But PHEAA has since refused to produce “requested records related to PHEAA’s handling of the PSLF program during the COVID-19 pandemic,” the AG’s press release states. “PHEAA refused to produce them, only agreeing to provide limited documents regarding non-government owned loans.”
A spokesman for PHEAA told CBS4 on Friday that the information requested was not approved for release by the U.S. Department of Education within the five business days the Colorado AG’s office demanded it. PHEAA “thus had no option other than to submit its objections to producing such federally owned data,” explained PHEAA’s Kevin New. He added that Colorado Attorney General Phil Weiser was included in “direct discussions” about the lack of permission.
“PHEAA reminded the Colorado Attorney General’s Office,” New continued, “of the existence of three separate federal trial court decisions which have held state licensing statutes do not apply to federal student loan contractors, and that Colorado’s state licensing statute expressly reads that licensees are not required to respond to requests that are inconsistent with federal law.”
CBS4 reached out to the U.S. Department of Education on Friday afternoon. A person with direct knowledge of the conflict was unavailable at that time. This story will be updated with any response.