Top Student Loan Servicer Navient Being Sued By the Government

The Consumer Financial Protection Bureau (CFPB) filed a lawsuit on Wednesday against Navient, the largest student loan servicer in the country. The allegation is simple but powerful: Navient illegally cheated borrowers out of certain rights they have in repaying their student debt. Read the full case filing.

Forbes reports Navient, which spun off from Sallie Mae, has more than 12 million customers and services more than $300 billion of government and private student loans. The government says that the lending company created obstacles for borrowers in order to prevent them from getting lower repayments. Some of the accusations listed in the suit are:

  • Providing Wrong and Obscure Information;
  • Incorrectly Processing Payments;
  • Not Logging Borrower Complaints;
  • Illegally cheated borrowers out of their rights to lower payments, which caused them to overpay for their student loans;
  • Deceived private student loan borrowers about requirements to release their co-signer from the loan; and
  • Harmed the credit of disabled borrowers, including severely injured veterans


“For years, Navient failed consumers who counted on the company to help give them a fair chance to pay back their student loans,” CFPB director Richard Cordray said in a statement Wednesday. “At every stage of repayment, Navient chose to shortcut and deceive consumers to save on operating costs. Too many borrowers paid more for their loans because Navient illegally cheated them and today’s action seeks to hold them accountable.”- Via Forbes


CFPB claims that Navient added an extra $4 Billion in interest charges by steering buyers into forbearance. Basically allowing users to stop making payments but allowing the student loan to continue to accumulate interest.

Navient's CEO told the Washington Post that absurdly complex rules are to blame for the problems with student loans and that it has repeatedly tried to work with the federal government to simplify the process. Read more about how Navient responded to these allegations here: CFPB Sues Student Loan Servicer Navient For Failing Borrowers 'At Every Stage'


If You Have Taken Out A Student Loan

  1. Determine if Navient serviced any of your loans
  2. Confirm you have up-to-date information about your loan
  3. Consider Income-Driven Payment Offers. See if you Qualify.
  4. Make sure extra payments are allocated correctly
  5. If you find any problems, complain!

The CFPB has an online portal set up for anyone who wants to complain about a lender, student loans included. You can use it to complain about your servicer (Navient or other) if you've been hit with charges you didn't deserve, your payments haven't been processed properly, or extra payments haven't been properly allocated. Speak up! It can't hurt and it just might help.



Trying to Appeal Student Debt? Apply For Federal Student Loan Forgiveness

Some college students across the nation have recently been applying for federal student loan forgiveness to help pay for their college loans.

According to CBS News, “More than 7,500 people have asked the federal government to forgive a total of $164 million in student loans…” Many of these students are forming arguments around the recent trend of "for-profit" colleges being found committing fraud because of their risky advertising guarantees.Infomercials and marketing materials have been found to claim future careers and earnings after graduation. Students are still paying the cost for widespread fraud found at Corinthian Colleges. The event brought attention to the federal program and the number of students submitting claims for loan forgiveness has risen.

Corinthian liquidated after declaring bankruptcy last year. A majority of the students from the colleges, mainly Everest Institute and Wyotech and Heald College, sought loan forgiveness or borrower defense to repayment from the Federal Student Aid (FSA), an office of the U.S. Department of Education.

In the U.S. Higher Education Act of 1965, there is a clause that allows students who were defrauded by their colleges to request loan forgiveness. This act also authorized most federal student financial aid programs. This included the Educational Opportunity Grant Program and the Guaranteed Student Loan Program.

“I don’t know if it’s the government’s job to compensate (students for the loans)…(loan forgiveness) is rare and underutilized,” said Melissa Shepherd, the director of Financial financial Aid aid at Longwood University.

What Is Federal Student Loan Forgiveness

Under the direction of President Barack Obama, the Obama Student Loan Forgiveness program has allowed that “the federal government will no longer give subsidies to private lending institutions for federally backed loans…borrowers of new loans starting in 2014 will qualify to make payments based on 10% of their discretionary income. (This) money will be used to fund poor and minority students and increase college funding,” according to Student Debt Relief.

The Student Loan Forgiveness Program assists those working in public service jobs, such as nonprofits, manage their debt loan through forgiveness after 120 payments (ten years). Students that qualify for one of these federal student loan forgiveness programs can possibly have their monthly payment reduced to $0/mo. To find out if you qualify for federal student loan forgiveness, contact us. 

“Student loans are a hot-button issue,” said Shepherd. “Even though over-borrowing is definitely bad, borrowing is not necessarily bad.”

If a student or parent is struggling to pay off the debt from student loans, Shepherd suggests, “Do not avoid the problem, (student loans are a) problem that doesn’t go away.”

Federal Loans Are Packaged in Students' Financial Aid Packages

There are two types of federal loans that are packaged with student financial aid at Longwood: student loans and parent loans.

Fifty-four percent of Longwood students receive federal loans. For undergraduate borrowers who complete their education, the typical total debt they face is $25,327 with a typical monthly loan payment of $281 a month, according to the FSA.

“Those that graduated in the fall had an average federal student loan debt of $24,365,” stated Shepherd. "A freshman has the ability to receive $5,500 in a federal loan," which will not come close to the full amount of tuition that is typically sought out through scholarships and grants.

However, if a student is independent and does not report their parent’s information on FAFSA (Free Application for Federal Student Aid) for any given reason, then they would be eligible to receive $9,500.

Although the cost of tuition for most universities has gone up, the amount of money that a student can borrow has remained the same.

What Loans Are Provided By the Government?

There are two types of loans offered by the government, subsidized and unsubsidized. Subsidized loans are need-based and result in the government paying for the interest on the loan while the student is in school. Unsubsidized refers to interest that accumulates over a period of time while a student is in school, and once a student graduates then the student is “paying interest on top of interest” to pay off the loan.

In reality, a lot of people don’t have that money that are getting loans, but if you do, it’s a smart option to pay the loan off.

Paying off your student loan can have a positive effect on your credit score. Graduates have a better chance of being accepted for their first apartment or car loan if they have built a solid credit history. Learn more about how a student loan affects your credit score. 

How to Apply For a Federal Student Loan Forgiveness Program?

If you have taken out a federal student loan and want to find out if you qualify for one of the federal student loan programs, fill out the form below.

ATI Career Training Centers In Texas Rips Off Students

ATI Career Training Centers In Texas Rips Off Students

ATI Career Training Centers in Texas were informed by the Texas Workforce Commission that they were to cease enrolling students in their programs as of 2014. ATI, a formerly $400 million company may have gotten away with ripping off its students and the taxpayers for several years, but with the closure of its 16 Texas-based campuses, Texas students will no longer become victims of this for-profit scam artist.

A former employee turned whistleblower led officials to investigate ATI and their discoveries about the company’s practices were quickly found to be true. Predatory enrollment practices were in place which had officials targeting strip clubs, homeless shelters, and low-income neighborhoods for prospective students. If students didn’t have the required educational backgrounds, no worries, ATI would simply forge any compliance documents required in order to make the student eligible for federal financial aid programs. Students unable to speak English were also enrolled in English-only classes to fill seats and meet the strict enrollment requirements set out by administration.

ATI committed fraud in several ways and was found to be fiddling around with grades, attendance reports, transcripts, and those who had never even set foot on campus found they had huge loans in their names which had been sent directly to ATI. If that weren’t enough, officials also discovered that ATI was lying about its job placement successes and job placement salaries. It was even found that companies listed as employing graduated ATI students had no such employees on site.

The investigation which led to this demand by TWC claims that ATI was lying about its job placement reports and that students were not even working in the places it indicated.  These false hopes came with a hefty price tag and left many students unable to find employment or pay off their student loans. Texas told ATI that current students must be allowed to finish the program at no additional cost or that ATI must arrange for students to complete their program at a comparable school at no charge to the student.

Why go through all that, you ask? ATIs fraudulent and predatory actions allowed them to dip into lucrative federal student loan programs and Pell Grants they could never have gotten their hands on otherwise without doing things by the book. The systemic, nationwide fraudulent activity got the company to a $400 million net worth but all it got students was huge debts and expensive fire starter.

Students enrolled in programs and failing were often recycled into other programs by the school in order to continuously receive federal student loan disbursements, maintain their eligibility status, and receive new funding. In the end, many of these students failed to meet course objectives, maxed out their federal loan amounts, and had no education to show for it. With tuition fees ranging from $13,741 to $46,744 per program, those dollars certainly added up quickly. Students showing interest in the predatory enrollment schemes were lured in by the rosy picture painted that they could escape poverty forever with ATIs guarantee of job placement with hefty salaries at the end of their programs.

While recent suits have resulted in settlements, none of them mean that ATI has had to admit to any wrongdoing. What’s $3.7 million to a company that defrauded the people and government out of $400 million, after all? Approximately $2 million of those settlements will go to refunding federal student loans for moneys ATI wasn’t entitled to, the remainder will go to other arbitration and a portion of what is left will go to the whistleblower that turned ATI in.  Those not part of the settlement are left to struggle with student debt for years to come, have few job prospects with their diploma, and many didn’t even manage to get out of it with the paper in hand. Those students who are affected by the settlement will still have to find another college, go through the entire program, and effectively start from square one.

If you feel you were defrauded by the school you attended or you are being treated poorly as a distressed borrower by your creditors, contact StudentLoanFAQ's and speak to one of our advisors about student loan forgiveness. You may qualify to consolidate or even wipe out your remaining student loans.