Something Rotten: Allegations Against Maximus/Aidvantage, A Massive Loan Servicer

One of the biggest sets of allegations in the student want loan world actually goes back to big sea changes that happened after a previous leader in student loan servicing left the stage, in the words of many experts, “in disgrace.”

After Navient left the industry amid a barrage of complaints, someone had to pick up the slack.

Now, Maximus or “Aidvantage,” is having its own problems with dozens of complaints reported on the CFPB over the past couple of years, as reported by the Washington Post, and some pretty significant evidence that this company may be playing fast and loose with student loan borrowers’ accounts. (Also, it’s never a good sign when a major company goes by two different names.)

First of all, Maximus manages 13 million federal student loans, according to industry sources. It reportedly has established $800 million in contracts with the Department of Education, and federal contracts make up an estimated 39% of its total revenue. ProtectBorrowers.org reports Maximus hoovering up $4 billion in taxpayer funds every year.

Another part of its fiefdom is Medicare administrative services – and the reach doesn’t stop there: Maximus also handles items related to Veteran’s Affairs and more for the U.S. government.

Accusations of Shady Practices

What some people describe in Maximus’s alleged legacy is, first of all, a lack of access to borrower information. Some also cite “inaccurate information,” which could just as easily be labeled false information. There are also allegations that Maximus/Aidvantage has acted improperly in handling student loans in default, and participated in the improper seizure of assets.

There were foreshadowing hints of this in 2021 as Maximus stepped up to the plate: check out his communique from the office of Senator Elizabeth Warren, in which she characterizes the company as having a “checkered past” even before its ascendance into student loan handling.

“(The company’s) track record as a contractor raises concerns that borrowers may be subject to poor service and abusive practices,” Warren wrote.

With the benefit of hindsight, many related questions have not gone away.

For its part, Maximus/Aidvantage doesn’t deny helping to run the Debt Management Collection System for the federal government, or working on the Default Resolution Group central to defaulting loans. Student Debt Warriors offers this advice:

“Defaulting on your student loans can wreak havoc on your credit score and lead to wage garnishment, the withholding of tax refunds, and more. Typically, you will default on your student loans if you stop making your monthly payments for a prolonged amount of time. If you are in default and your loan has been transferred to the Default Resolution Group, it’s critical that you contact them as soon as possible so that you can discuss the options available to you. It may be possible to rehabilitate your student loans and wipe the default from your credit history.”

As for Maximus, a slick website promotes the company’s customer service bonafides with flowery language that despite its effusiveness reads a bit dull, kind of like ChatGPT, ex:

“Government agencies and their private sector partners that operate citizen engagement centers must ensure that they are building a workforce and an infrastructure that empowers agents to deliver the help citizens need. This is not your run-of-the-mill retail engagement center set up. It requires an overall employee engagement strategy that is more holistic and intentional than most. And, it must enable the people on the citizen engagement center frontlines to be more empowered and effective than ever. At Maximus, there are three very important ways we make that happen…”

(TLDR: The rest is more puffery about equipping teams and optimizing talent.)

Set against that are the reports of complaints to the CFPB last year, and CFPB warnings that might not mention Maximus by name, but seem to center on just the kinds of unfair practices the firm is accused of.

Bad Schools, Bad Loan Servicing

When we look at the entire student loan pipeline, it’s relevant to note that students often experience a one-two punch – first, they get taken advantage of by a school that doesn’t offer what it’s advertising, and then the lenders engage in fraud and abusive practices in collections.

Take the example of Corinthian school, where the federal government ended up forgiving millions of dollars of student loans because of misbehavior by that private institution.

Maximus’s name pops up in associated releases.

Others accuse Maximus/Aidvantage of obscuring its identity, and playing with the gray area between the Department of Education and its contractors.

All of this paints a rather alarming picture of the challenges that millions of Americans face in handling their student loan payments. To the extent that lenders or services or other involved parties are misrepresenting themselves, releasing false information, and making it difficult or merely impossible for borrowers to figure out what’s actually going on with their accounts, you have some of the most aggressive unfair lending practices in the entire market. Don’t let bad student loan lenders ‘happen’ to you! Keep reading our exposes of bad lending practices, and check with CFPB and related resources. Know your rights, because there are shady things going on in this part of finance.