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I-Team Update: Some Get Refunds As Mass. AG Looks At MEFA Billing Company

BOSTON (CBS) -- The WBZ I-Team has learned the Massachusetts Attorney General's office is taking action against a company that handles billing for the Massachusetts Educational Financing Authority (M.E.F.A.).

Meanwhile, some borrowers are receiving refunds.

Tania Martins is just one college student who took out several loans with M.E.F.A.

"I feel like I'm never going to pay them off," Martins told WBZ's I-Team.

But since graduating and paying thousands of dollars, there's barely a dent in her debt.

"I still owe 70-thousand dollars. Don't know how. The numbers just don't add up," she said.

Tania even cancelled her med school dreams because she says the company that handles M.E.F.A.'s billing -- A.C.S. -- wouldn't offer a more affordable plan.

"Their answer was, 'Miss a payment and we'll come after your house,' " Martins said.

The I-Team found more than 500 complaints against the national loan servicing company, including a borrower in New Hampshire who described the repayment structure as "financial terrorism."

I-Team reporter Ryan Kath asked Massachusetts Attorney General Maura Healey how big is this?

"It's a big deal," replied Healey.

Healey tells the I-Team that A.C.S. has agreed to pay $2.4 million, money that will provide restitution to borrowers.

"The company mishandled it. They screwed it up. And they didn't get students into the kind of repayment plan that they can afford," the attorney general said.

The settlement also includes allegations of excessive late fees, improper loan payment processing and harassing debt collection practices.

As part of the settlement, the company agreed to establish a unit that will help borrowers get into affordable repayment plans based on their income. The attorney general says you can contact her office to find out if you're eligible for any of that money.

We first learned of the AG's probe earlier this year and took those questions to M.E.F.A.

Ryan Kath asked a M.E.F.A. representative, "What's your reaction to that?"

"I can't comment on that," Martha Savery said.

Kath followed up by asking, "How concerned does that make you?"

"As I said to you, A.C.S. is M.E.F.A.'s loan service provider," Savery replied.

But the AG tells the I-Team she's confident there are now improvements in place to protect Massachusetts borrowers.

"We need to send a message to companies and loan servicers out there that we take this seriously and we want to make sure people play by the rules so that people, especially students, don't get hurt," Healey said.

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