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
- Determine if Navient serviced any of your loans
- Confirm you have up-to-date information about your loan
- Consider Income-Driven Payment Offers. See if you Qualify.
- Make sure extra payments are allocated correctly
- 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.