CFPB’s Case Against Conduent: What Student Loan Borrowers Need to Know
How the CFPB’s enforcement action against Conduent Education Services sheds light on student loan servicing failures and borrower protections.
In 2019, the Consumer Financial Protection Bureau (CFPB) announced an enforcement action and settlement with Conduent Education Services, LLC (CES), a major student loan servicer formerly known as ACS Education Services. The case focused on years of improper handling of federal student loans and offers an important lesson in how loan servicing failures can harm borrowers.
This article explains what happened, why it mattered under federal consumer financial law, how the consent order worked, and what student loan borrowers can learn from the case.
Background: Who Is Conduent Education Services?
Conduent Education Services was a large student loan servicing company that handled billing, payments, and account maintenance for a substantial portfolio of education loans, including loans made under the Federal Family Education Loan Program (FFELP). FFELP loans were federally backed but issued by private lenders and serviced by companies like CES.
CES operated for years under the name ACS Education Services before being rebranded as Conduent Education Services. By the time the CFPB announced its enforcement action, CES was already in the process of winding down its business and exiting the student loan servicing market.
Key Problems Uncovered by the CFPB
The CFPB found that CES failed to properly and promptly adjust the principal balances on certain FFELP student loans, leading to inaccurate balances for many borrowers. These errors arose when loans should have been modified due to changes in repayment status, including:
- Periods of deferment (temporary suspension of payments)
- Periods of forbearance (temporary reduction or suspension of payments)
- Borrowers entering Income-Based Repayment (IBR) or similar income-driven plans
Instead of re-calculating the balances quickly and accurately, CES placed needed adjustments into processing queues where, in some instances, they remained uncorrected for months or even years.
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How the Delay in Adjustments Harmed Borrowers
When principal balances are wrong, virtually every part of a loan can be affected. According to the CFPB’s findings, delayed or missing adjustments led to several types of harm:
- Borrowers paid off loans at inflated balances, because the system still reflected amounts that should have been reduced.
- Some borrowers were blocked or delayed from consolidating their loans while they waited—sometimes for months—for CES to correct principal amounts.
- Inaccurate records undermined trust in account statements, payoff quotes, and payoff processing.
In many cases, borrowers had no way to know that their balance was wrong; they could only rely on what the servicer told them the payoff amount or outstanding principal was.
Legal Framework: Why the Conduct Was Unlawful
The CFPB concluded that CES’s practices were unfair acts or practices under the Consumer Financial Protection Act of 2010 (CFPA). The CFPA authorizes the CFPB to prohibit unfair, deceptive, or abusive acts or practices in connection with consumer financial products or services.
| Legal Element | Meaning in Plain Language | How It Applied to CES |
|---|---|---|
| Substantial injury to consumers | Consumers suffer significant monetary or other harm. | Borrowers overpaid or could not consolidate because balances were wrong. |
| Not reasonably avoidable | Consumers cannot protect themselves through reasonable effort. | Borrowers relied on servicer calculations and could not independently identify or fix the errors. |
| No countervailing benefits | Any benefits to consumers or competition do not outweigh the harm. | There was no legitimate consumer benefit to leaving principal adjustments unprocessed for long periods. |
Because these conditions were met, the Bureau determined that CES’s conduct violated the CFPA and warranted enforcement and penalties.
The Consent Order: What Conduent Was Required to Do
The CFPB resolved the matter through a consent order, an administrative order that both outlines violations and imposes specific obligations on the company. Without admitting or denying every factual allegation, CES agreed to undertake several forms of remediation and pay a civil penalty.
Core Requirements Under the Order
Among other provisions, the consent order required CES to:
- Correct principal balances on affected FFELP loans when it had not yet done so.
- Provide monetary restitution to borrowers or third parties who had already paid off loans using incorrect balances.
- Improve and document its servicing, adjustment, and accounting practices as part of compliance obligations.
- Pay a $3.9 million civil money penalty to the CFPB’s Civil Penalty Fund.
The Civil Penalty Fund is used by the CFPB to compensate harmed consumers in cases where direct restitution from the violating firm is not available or is insufficient.
Compliance and Reporting Obligations
The order also imposed detailed reporting and oversight requirements on CES, which included providing regular compliance progress reports and making records available for the CFPB’s review. These measures help ensure that ordered remedies are actually implemented, not just promised on paper.
Why This Case Matters for Student Loan Borrowers
The Conduent case illustrates how problems deep in the back office—such as delayed system updates and incomplete accounting procedures—can create real, tangible harm for borrowers. It also shows the role of the CFPB in monitoring the student loan servicing industry.
Signals of Systemic Servicing Problems
Issues in the Conduent matter overlapped with broader concerns regulators and watchdogs have raised about the student loan market, including:
- Complex payment status rules (deferment, forbearance, income-driven plans) that require accurate, timely updates to be fair.
- Reliance on servicers’ systems for payoff amounts, consolidation eligibility, and account histories.
- The risk that borrowers pay more than they owe when errors go undetected for long periods.
Federal agencies and independent researchers have repeatedly noted that servicing breakdowns can undermine the benefits Congress intended to provide through federal loan programs. For example, when servicers fail to properly track deferments, forbearances, or qualifying payments, borrowers may lose out on reduced payments or forgiveness they should have received.
What Borrowers Can Do if They Suspect Servicing Errors
Even though CES has wound down its servicing operations, the lessons apply to any borrower with federal or private student loans serviced by other companies. Here are practical steps borrowers can take.
1. Keep Detailed Records
- Save monthly statements, payment confirmations, and any letters or emails about deferment, forbearance, or repayment plans.
- Download and keep copies of payoff quotes and any documentation related to consolidations or refinancing.
These records can be critical if questions arise about whether your principal balance was calculated correctly or whether you qualified for certain forms of relief.
2. Check Balances Against Expectations
Borrowers should periodically compare their balances and payment histories with publicly available program rules, especially for federal loans. The U.S. Department of Education provides detailed information about repayment plans, deferment, and forbearance options for federal student loans. If balances do not seem to reflect expected changes—such as capitalization of interest after certain events or reductions after qualifying payments—this can be a red flag.
3. Submit Written Disputes to the Servicer
- Describe the issue clearly and reference specific dates, amounts, and documents.
- Ask the servicer to explain how your balance was calculated and to provide a full payment history.
- Request correction and a written response if any errors are found.
Putting disputes in writing creates a record and can trigger formal investigation processes within the servicing company.
4. Escalate Complaints When Necessary
Borrowers who cannot resolve problems directly with their servicer can escalate complaints to oversight bodies. For federal loans, the CFPB and the U.S. Department of Education accept borrower complaints and may intervene or use the information to identify systemic problems.
Broader Regulatory Context
The Conduent settlement is part of a larger pattern of enforcement and oversight actions involving student loan lenders and servicers. In multiple cases, the CFPB has alleged that companies violated consumer protection laws by misrepresenting products, failing to provide required disclosures, or engaging in unfair practices in the administration of education loans.
In addition to enforcement, federal agencies periodically update guidance and regulations to clarify expectations for servicers and to protect borrowers in areas such as loan discharge, income-driven repayment, and loan forgiveness programs. These evolving standards reinforce that servicing companies must invest in accurate systems, staff training, and quality control.
Practical Takeaways for Current and Former CES Borrowers
Borrowers whose loans were once serviced by Conduent or ACS may wonder how the enforcement action affects them. While specific relief depends on individual circumstances and the terms of the consent order, several general points apply:
- The CFPB required CES to correct balances or provide restitution where its conduct caused financial harm.
- Some of the funds paid in civil money penalties may be used, where permitted, to help compensate harmed consumers through the CFPB’s Civil Penalty Fund.
- Borrowers can still request account histories from current servicers and review whether their balances appear consistent with program rules and their payment records.
Anyone who believes they were harmed by past servicing errors may consider speaking to a legal aid organization or consumer attorney familiar with student loan law for individualized advice, especially if large dollar amounts are involved.
Frequently Asked Questions (FAQs)
Q1: What exactly did Conduent do wrong with student loans?
According to the CFPB, Conduent Education Services failed to timely adjust principal balances on certain FFELP loans when borrowers entered deferment, forbearance, or income-driven repayment, and some of these adjustments were delayed for months or years. This caused some borrowers to overpay and others to face delays in consolidating loans.
Q2: How much was Conduent required to pay in penalties?
Under the consent order, CES was required to pay a $3.9 million civil money penalty to the CFPB. The company also had to correct loan balances and provide restitution to affected borrowers or third parties that paid off impacted loans.
Q3: Does the settlement cancel or forgive affected student loans?
The enforcement action did not automatically cancel or forgive all loans serviced by Conduent. Instead, it focused on correcting principal amounts, making restitution where borrowers overpaid, and imposing a civil penalty. Any loan forgiveness would come through separate federal programs or lender decisions, not directly from this settlement.
Q4: If my loan used to be with ACS or Conduent, how do I know if I am covered?
The consent order required Conduent to identify affected accounts and implement remediation. Borrowers who believe they were impacted but did not receive notice can review historical records and contact their current servicer with questions. They may also submit complaints to the CFPB if they suspect unresolved harm.
Q5: What does this mean for student loan servicing in general?
The case underscores that servicers must maintain accurate, timely systems for adjusting balances when borrower circumstances change. It also signals that regulators will use their authority under the CFPA to address unfair practices in the student loan market, particularly when systemic errors lead to widespread financial harm.
References
- Conduent Education Services, LLC – Enforcement Action — Consumer Financial Protection Bureau. 2019-05-01. https://www.consumerfinance.gov/enforcement/actions/conduent-education-services-llc/
- CFPB Settles with Conduent Education Services, LLC — Consumer Financial Protection Bureau Newsroom. 2019-05-01. https://www.consumerfinance.gov/about-us/newsroom/bureau-settles-conduent-education-services/
- Consent Order: In the Matter of Conduent Education Services, LLC, File No. 2019-BCFP-0005 — Consumer Financial Protection Bureau. 2019-05-01. https://files.consumerfinance.gov/f/documents/cfpb_conduent-education-services-consent-order_2019-05.pdf
- CFPB Fines Student Loan Servicer Conduent $3.9 Million for Unfair Practices — American Banker. 2019-05-03. https://www.americanbanker.com/news/cfpb-fines-student-loan-servicer-conduent-39-million-for-unfair-practices
- CFPB Takes Action Against Student Lender for Misleading Borrowers About Income Share Agreements — Consumer Financial Protection Bureau. 2021-09-07. https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-against-student-lender-for-misleading-borrowers-about-income-share-agreements/
- CFPB Administrative Adjudication Docket: Conduent Education Services, LLC — Consumer Financial Protection Bureau. 2019-05-01. https://www.consumerfinance.gov/administrative-adjudication-proceedings/administrative-adjudication-docket/conduent-education-services-llc/
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