New York sues big U.S. student loan servicer for abusing borrowers

New York state on Thursday sued one of the largest federal student loan servicers, whose practices the U.S. government singled out for criticism earlier this year, saying it abusively treated borrowers working in lower-paying public service jobs. The lawsuit by state Attorney General Letitia James adds to a growing list of complaints by borrowers and regulators against the Pennsylvania Higher Education Assistance Agency, which operates as FedLoan and American Education Services. James said FedLoan has "failed miserably" as the sole servicer since 2012 for the federal Public Service Loan Forgiveness program, which excuses borrowers who work in public service for 10 years from repaying their loans, provided they make some qualifying payments.

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