ACS – A Predatory Student Loan Servicer

Are you (or do you know someone who is) one of the unfortunate students forced to deal with ACS (Affiliated Computer Services, a Xerox company with unfair business practices) in paying Screen Shot 2013-05-24 at 1.07.03 PMback your FFEL student loan? Well, if so, too bad for you. There is no dispute resolution offered for students who find this company a nightmare to work with. It’s not just me saying that ACS is a toxic liability for students who are already saddled with exorbitant tuition in a mostly down job market.

A little background first.

The 45-year FFELP (Federal Family Education Loan Program) is a failed experiment in corporate socialism where government subsidies for private banking involved unnecessary giveaways to Sallie Mae (SLM Corp., the nation’s largest student loan provider), Citibank, and other commercial banks exposed in blatantly exploiting the system.

The demise of the FFELP was hastened in early 2007, when New York Attorney General Andrew Cuomo began exposing the corrupt relations between firms lending to students and the colleges they attended. Lenders that had been buying off college loan officials were forced to refund millions of dollars to borrowers.

Congress responded by cutting the private lenders’ subsidies. But after the 2008 economic crash, the lenders claimed they could no longer afford to lend to low-income (high-risk) borrowers without these subsidies. Congress therefore acquiesced with a May 2008 law requiring the federal government to give banks two-thirds of the funds lent to students. The bill also required the Education and Treasury Departments to buy loans from lenders made between May 2008 and July 2009 for the full value of the loans plus interest. To comply with this bill, the Department of Education projects that it will eventually have to buy $112 billion in FFELP loans. (You can read about the whole mess here.)

But there are still thousands of these FFELP loans still owned by private loan “servicers” (companies selected by banks to take over these loans). At least a few of these “servicers” are corrupt and fraudulent in their business practices. The banks did not allow students to select their servicers. Furthermore, now that students are stuck with some of these shady companies, they are given the runaround by the companies themselves as well as by the government agencies that have washed their hands of any dispute resolution. Student Loan Ombudsmen have no power to negotiate or resolve diputes against these corrupt companies. Even the complaint form for the Inspector General for the U.S. Department of Education will not take complaints about a loan servicer. Students are stuck in limbo and being charged exorbitant and fraudulent fees.

Take ACS, for example.

A large number of ACS’s angry customers (the single red star on the ratings graphic above – found on the Consumer Affairs website – indicates the number of “angry” customers) have requested a class-action lawsuit, but no one is taking them seriously. In the meantime, students have become a cash machine for ACS who, by accounts you can read online (see below), look for opportunities to place student student into default. This is why I call ACS a predatory loan servicer, and it should be held accountable. Will it be? Nah. Probably not. Like I said, if you’re stuck with them, tough luck.

If you’d like a sampling of thousands of such (mostly legitimate) complaints against just ONE of these companies (ACS–the company is a nightmare to deal with; I know because it’s one of my servicers assigned to me by the equally corrupt U.S. Bank) you can read them on the following links

Consumer Affairs – Customer Complaints Against ACS (nearly 200 complaints)

Better Business Bureau – Customer Complaints Against ACS (800+ complaints plus an “F” grade by the BBB)

Please use as many social media sites as possible to spread the word about ACS.

Will anyone even read this post, let alone understand or sympathize with the plight of thousands of scammed students? Let alone spread the word? I doubt it. This website doesn’t get that much traffic anyway. Perhaps I’m dead.


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