ALBANY — The state attorney general’s office has reached an agreement with a student debt collection firm that will result in the dismissal of thousands of lawsuits the company brought against student borrowers.
The office of Attorney General Letitia James found that Transworld Systems, Inc., the principal debt collector for the National Collegiate Student Loan Trusts, violated multiple federal and state consumer protection laws by making “false, misleading and deceptive statements” in its collegiate student loan lawsuits and in communications with borrowers.
As part of the agreement, Transworld must make changes to its debt collection process and pay $600,000, which will be disbursed as restitution to New York borrowers and as penalties to the state, according to a Monday news release from the attorney general’s office.
“For years, Transworld used fraud and deception to pursue defaulted borrowers and obtain default judgments on a massive scale,” James said. “Our investigation not only is putting hundreds of thousands of dollars back into the pockets of student borrowers, but brought about concrete changes by Transworld, which is now finally providing consumers struggling with defaulted student loan debt all the protections required by law.”