Conduent Education Services, a federal student loan servicer, has agreed to pay $9 million to settle claims that it steered borrowers away from less expensive loan repayment plans in favor of costlier options, state regulators announced Friday.

Borrowers eligible for restitution from the company are expected to receive between $100 and $450 in the first settlement under the administration of new Attorney General Letitia James. The state Department of Financial Services was also involved in the settlement.

It's also the first time a case has dealt with alleged deceit by a federal student loan server over the Public Service Loan Forgiveness program, which offers loan forgiveness for borrowers who work in a public service job, according to James' office.

“[Conduent] has systematically failed borrowers by refusing to educate them on more effective federal repayment options, and instead, pushing them towards options that padded their bottom line,” James said. “At a time when the student debt crisis is at an all-time high, federal loan servicers should be supporting borrowers, not deceiving them at every turn.”

Regulators alleged the company, for several years, directed borrowers into forbearances, or a temporary pause in payments, when they were struggling to afford the cost of repayment. According to the state, the company decided not to tell borrowers they could apply for a program that would reduce their payments based on their income, rather than the time left in their repayment.

The company was also accused of telling borrowers who were behind on their payments that they were more overdue than they actually were. That was an effort to maximize the company's collections, according to the state.

Conduent Education Services, which was previously known as ACS Education Services, has agreed not to service loans for the major federal programs or private loans for the next five years. The company could not immediately be reached for comment Friday afternoon.

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