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ARTICLE · 30 JULY 2025

Massachusetts AG Settles With Student Loan Lender On AI-Based Fair Lending Violations

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On July 10, Massachusetts Attorney General Andrea Joy Campbell announced a $2.5 million settlement with a student loan company to resolve allegations that its underwriting practices...

United StatesTechnology
A.J. Dhaliwal
A.J. Dhaliwal
Mehul Madia
Mehul Madia
Beineng Zhang
Beineng Zhang
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On July 10, Massachusetts Attorney General Andrea Joy Campbell announced a $2.5 million settlement with a student loan company to resolve allegations that its underwriting practices violated the Massachusetts Consumer Protection Act and the Equal Credit Opportunity Act, including through the use of artificial intelligence models that produced disparate impacts on protected groups.

The Attorney General's investigation focused on both automated and manual underwriting systems used to issue and refinance student loans. Regulators alleged that the company's models and override processes lacked appropriate oversight, failed to assess for discriminatory effects, and incorporated inputs that may have disproportionately harmed non-white and non-citizen applicants. The matter was resolved through an assurance of discontinuance filed in Suffolk County Superior Court.

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