Conduent Education Services False Claims Settlement: Monthly Account Changes, Quarterly Federal Bills

Conduent Education Services agreed to pay $7,992,000 in a false claims settlement over allegations that missed account adjustments and improper military deferments caused incorrect federal lender bills. The Education Department relied on the servicer’s data to make payments to lenders and receive payments from them. If you handled borrower adjustments or the reports built from them, your view inside the operation may reach all the way to the government’s bill.

The January 14, 2022 agreement identifies Conduent as formerly Xerox Education Services and doing business as ACS Education Services. The company serviced loans for lenders under the Federal Family Education Loan program. The Justice Department entered the agreement on behalf of the Education Department to resolve the civil claims.

This page follows Conduent’s monthly account adjustments, quarterly lender reporting and settlement payment terms. Our discussion of when an education complaint connects to public money covers the broader question across schools and vendors. Here, the crucial link was the information a servicer certified about loans already on the books.

How Did Conduent’s Loan Adjustments Reach Federal Lender Reporting?

Conduent supplied account information through the Education Department’s Lender Reporting System and certified quarterly that the billings were accurate. Under the agreement’s description of its servicing duties, the company had to reflect monthly student-loan repayments, principal capitalization and other borrower-account changes in that system.

An account adjustment therefore had a public-money consequence beyond the balance a borrower saw. A servicing employee may recognize the account event, while someone responsible for lender reporting sees the figures that reached the department. We connect those views to the same loan and reporting period.

The Justice Department alleged that the servicing errors could misstate a borrower’s balance and affect interest and special allowance payments over the life of the loan. For someone who saw an adjustment left undone, the useful connection is what the company subsequently reported and certified about the affected accounts.

Which Account Adjustments Did the Settlement Cover?

The first allegation covered January 2006 through December 2016, when the Justice Department said Conduent knowingly submitted or caused false claims by failing to make required financial adjustments. Those adjustments followed borrower requests for deferment, forbearance, income-based repayment, reduced interest under the Servicemembers Civil Relief Act and certain other status changes. The agreement covers individual borrower accounts and packets of accounts.

A borrower requested a change, the account required a financial adjustment, and the figures supplied for federal billing had to reflect it. In the Justice Department’s allegation, the failure to make that adjustment helped produce the false claim. Someone who knew the request and the required correction could see a discrepancy before anyone examining the quarterly bill would recognize it.

The reference to packets of accounts matters to an insider who handled work across several loans. The alleged failure was described at both the individual-account and grouped-account level. We would examine how the affected accounts were identified, which adjustments were required and how the reporting treated them.

We see the absurdity in the Justice Department’s account: Conduent allegedly left required financial adjustments undone while certifying that its billings were accurate. The correction was missing. The assurance was not.

Military Deferments Created a Separate Billing Question

The second allegation covered August 13, 2008 through April 30, 2014, when the Justice Department said Conduent improperly treated some borrowers as eligible for military deferments. It alleged that Conduent then billed the Education Department for interest or special allowance payments for lender clients based on that status.

That differs from the first allegation’s failure to make a required adjustment after a borrower requested a change. Reduced interest under the Servicemembers Civil Relief Act appears in the account-adjustment allegation. Military-deferment eligibility appears in the separate allegation.

For someone who worked with military-deferment decisions, we would connect the basis for the status, the period it covered and the lender billing that used it. The Justice Department alleged a loss from the servicing errors and inaccurate data, tying the internal account treatment to money paid by the Education Department.

Why Did Older Federal Family Education Loans Still Generate Federal Payments?

New loans under the Federal Family Education Loan program ended July 1, 2010, while subsidies, reinsurance and servicing-related government transactions continued. Existing loans still connected lenders and guaranty agencies to federal money. That explains why the Conduent allegations extended beyond the end of new lending under the program.

The Federal Student Aid fiscal year 2024 annual report puts the continuing lender payments in perspective: approximately $2.0 billion for interest and special allowances that year. Those were program payments on legacy loans, years after new Federal Family Education Loan originations ended. The older loans still generated a federal bill.

This is one of the distinct government education funding payment chains. A school’s certification for a new student award concerns the aid being issued, while Conduent’s quarterly reporting concerned the servicing of existing loans for lenders. The account balance, status and billing history supplied the connection in this case.

Conduent exited the student-loan servicing business on September 1, 2019, according to the agreement. Its settlement addressed the earlier servicing periods. For an insider describing work under the ACS or Xerox name, the agreement’s corporate history and conduct dates help place that work in the operation the Justice Department’s allegations concerned.

What Do the Conduent Settlement Numbers Mean?

The settlement gave Conduent credit for $1,442,000 already paid under a remediation plan with the Education Department, leaving $6,550,000 payable to the United States. The plan addressed part of the alleged account-adjustment billing errors. For someone who worked on remediation, that credit connects the earlier corrective work to the settlement’s remaining obligation.

Within the total settlement, the agreement designated $4,675,000 as restitution. Within the remaining payment, it designated $3,233,000 as restitution. Those amounts describe money owed to the government under the agreement.

Settlement Costs Could Not Become Another Federal Bill

Conduent also agreed to keep the costs of the matter out of its charges to the federal government. The agreement required separate accounting for investigation, defense, corrective work and settlement costs, and barred charging them directly or indirectly to a federal contract.

That provision reaches the cost records an accounting or contracts employee might know. The agreement also required Conduent to identify and repay any such costs already included in requests for federal payment, through adjustments to future claims or otherwise. Taxpayers were not supposed to receive that bill, too.

What Can a Servicing Insider’s Records Connect?

A servicing insider’s account history can connect a borrower request or deferment decision to the financial data certified for federal billing. In Conduent’s case, the agreement identifies the points that mattered: required adjustments, reported balances, eligibility status, quarterly certifications and the payments those data affected. We work with the person who understands those records to determine how the pieces fit.

Someone handling borrower requests may know what change was requested and what work remained unfinished. Someone involved in account processing may understand how an individual account or packet was treated. Someone handling lender reports may know which figures went into the certified bill. Those are different views of the same alleged connection between the servicing work and the public payment.

The connection between internal records and public payments also depends on who knew about the discrepancy and what they did with that information. The account-adjustment allegation expressly concerned knowing submission of false claims. We examine the request, the financial treatment and the reporting decision together, with the insider who can explain why a missing adjustment mattered. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What the Quarterly Bill Left Out

If you saw account corrections left unfinished or deferment decisions carried into lender bills, speak to one of our Whistleblower Experts about the servicing records you know. We build the case around your understanding of those records, find the student-loan fraud whistleblower lawyers it needs and stay beside you as the case moves forward.