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What the Navient Lawsuit(s) Means For Your Student Loans

Two lawsuits against the country's largest student loan servicer, Navient, could have an impact on your loans.

CREDIT: Pexels

Orginally posted on Genprogress. 

BY SENYA MERCHANT | FEBRUARY 15, 2017 AT 5:29 PM

In the aftermath of the the Consumer Financial Protection Bureau’s (CFPB) lawsuit against Navient, the largest student loan servicer in the country, we wanted to get in touch with our readers about what this could mean for their own student loans.

“Navient–formerly known as Sallie Mae–allegedly cheated consumers at every stage of the repayment process,” student loan expert Rohit Chopra told Generation Progress. “If you believe you were a victim of shortcuts or deception, you should file a complaint with the Consumer Financial Protection Bureau to get immediate help.”

It’s worth noting that a separate consumer class action lawsuit was filed days after the CFPB announced their lawsuit for borrowers that attempted to pay off their loans earlier by making larger payments than their monthly payment plan required them to. You can read more about whether you qualify for restitution under the Florida consumer class action lawsuit here.

Read on even if Navient is not your student loan servicer. We think this lawsuit serves as a warning shot to other servicers who may be getting away with the same practices that put financial interests above consumers’ interests.

 

If Navient is your loan servicer:

Compensation for injury is not guaranteed: The CFPB is requesting that the court order Navient to pay restitution to affected borrowers in addition to a financial penalty. But because CFPB is a government agency and this lawsuit is not a class action lawsuit you should not expect redress at this particular point in time.
You may be able to fire Navient: For borrowers with older federal student loans (under the FFEL program), you can consolidate your loans into Direct Loans and choose your servicer. You’ll also be able to enroll in more generous income-driven repayment plans and Public Service Loan Forgiveness.
You should keep making your monthly payments on time: If you can afford to keep making your monthly payments on normal schedule you should absolutely do so. If you can no longer make your monthly payments, visit studentloans.gov to enroll in an Income-Driven-Repayment (IDR) plan. This can help you even if you are currently unemployed.
You can follow us to view the progress of the CFPB lawsuit.

 

If Navient is not your loan servicer:

Find out who your lender and servicer are: You can find out who your loan servicer is and get their contact info by logging onto your Federal Student Aid profile with your Federal Student Aid ID. Create an FSA ID if you don’t already have one.
Know your rights as a borrower: You can find the full extent of your rights as a student loan borrower here.
Understand all of your repayment options: Your loan servicer is supposed to help you navigate the many ways you can successfully repay your student loans but, as history shows us, these companies don’t always have consumers’ best interests in mind. That’s why it’s so important to educate yourself on the many repayment options for your unique financial situation. Find out about student loan refinancing, income-driven repayment, federal student loan consolidation and student loan forgiveness.
Additional hot tips:
If you’ve made payment decisions with your loan-servicer over the phone make sure you also confirm any changes in writing.
Enroll in automatic monthly payments, which may reduce your interest rate and also guarantees your loan-servicer is always receiving your payments.
File a complaint: If you’ve had a bad experience with your loan servicer or you think it is committing some of the same acts that Navient was sued over, you should file a complaint with:
Consumer Financial Protection Bureau
U.S. Department of Education
Your lender
Your servicer
Senya Merchant is an Organizing Associate for Generation Progress.

 

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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.