November 01, 2017

Navient Lawsuits Could Impact Millions of Borrowers

This year, student loan debt nationwide has reached $1.4 trillion, representing millions of borrowers who have taken out loans to acquire education and skills that improve their position in the workforce. But as funding for educational opportunities grows, so do untrustworthy companies who prey on student loan borrowers, as they look to secure their own […]

This year, student loan debt nationwide has reached $1.4 trillion, representing millions of borrowers who have taken out loans to acquire education and skills that improve their position in the workforce. But as funding for educational opportunities grows, so do untrustworthy companies who prey on student loan borrowers, as they look to secure their own piece of this trillion-dollar pie.

One such company that recently made headlines is Navient, a Delaware-based student loan servicer and collector which manages roughly $300 billion in student loans for individuals across the U.S.

Formed after the split of Sallie Mae in 2014, Navient currently serves over 12 million borrowers, and is today recognized as the largest student loan servicer in the United States. However, a recent lawsuit filed against the servicer may have an impact on the company’s financial holdings, not to mention its permanent reputation.

Why is Navient Being Sued?

In January of 2017, the Consumer Financial Protection Bureau (CFPB) launched the first lawsuit against Navient on behalf of borrowers who used the servicer for their student loans. Since then, several states have followed up with their own lawsuits, with the latest being issued by the Pennsylvania Attorney General’s office in early October.

These lawsuits, as stated by the Pennsylvania AG’s office, allege that Navient has “harmed countless student loan borrowers” as a result of their “peddling risky and expensive subprime loans that they knew or should have known were likely to default.”

These class action lawsuits also claim that Navient played an active role in ensuring borrowers were unable to successfully pay their student loans on time, and at times misled borrowers into thinking their student loans had been paid off.

In total, the list of allegations offered in a press release by the CFPB claim that Navient:

  • Failed to correctly apply or allocate borrower payments to their accounts
  • Steered struggling borrowers toward paying more than they have to on loans
  • Obscured information consumers needed to maintain their lower payments
  • Deceived private student loan borrowers about requirements to release their co-signer from the loan
  • Harmed the credit of disabled borrowers, including severely injured veterans

If these allegations are true, it would place Navient in direct violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Fair Credit Reporting Act, and the Fair Debt Collections Practices Act.

How Borrowers Were Impacted

One of the allegations against Navient is their supposed use of student loan “shortcuts” to minimize costs for the company itself, while they raked in as much as $4 billion in interest charges on balances held by borrowers.

These shortcuts allegedly occurred when Navient illegally directed borrowers who were struggling to make payments due to financial hardship into questionable payment plans that temporarily postponed bills. While such federal programs do exist to help borrowers facing long-term hardships, Navient allegedly saw this as an opportunity to grow interest on these loans, and in turn, make the debt even harder to repay.

Navient denies all the allegations being made against the company. As a result, they have filed two motions to have the cases dismissed, both of which have been denied by the court.

What to Do if You Have a Navient Loan

While two class action lawsuits have already been settled, more are expected to come, particularly after the latest lawsuit by the Pennsylvania AG’s office. If you currently have one or more student loans through Navient, you may have already been contacted regarding these lawsuits either by email, mail or phone.

For borrowers with good credit and a consistent student loan repayment history, it may be possible to move Navient student loans over to another servicer. In fact, some officials are saying that even if you’ve had trouble with student loans or credit, it could be worth finding out about other lenders and programs that are available.

According to one reputable student loan website, Navient has received over 8,000 federal and private complaints in 2017 alone. With the year almost over, and the lawsuits piling up, Navient borrowers should consider the following student loan repayment and student loan consolidation options to get in better financial shape with a more trustworthy lender.

Each of these programs have their own requirements and benefits, but offer another way to get out of student debt, without the stress of knowing that you’re with an untrustworthy lender. If you have any questions about these programs or need further assistance, you can speak with a student loan specialist at (800) 771-6358 or fill out our online form.