What Borrowers Should Know about the Navient Lawsuits

Navient, the nation’s largest student loan servicer, is facing multiple lawsuits for misleading and mistreating student loan borrowers across the United States, and these lawsuits may take quite some time to resolve. Here are some important things student loan borrowers should know about the legal action against Navient:– Navient is the U.S.’s largest servicer – Navient was formerly part of Sallie Mae, but now services over 12 million borrowers and over $300 billion in student debt. It is being sued by the Consumer Financial Protection Bureau (CFPB) as well as the states of Illinois and Washington.– The accusations are serious –Navient allegedly provided borrowers with bad information about repayment options, failed to properly allocate and process payments, and ignored complaints about poor service from customers. “For years, Navient failed consumers who counted on the company to help give them a fair chance to pay back their student loans,” said CFPB Richard Cordray in January. “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.”– Navient made over $4 billion in unnecessary interest – Borrowers who were eligible for income-based repayment plans were instead encouraged by Navient to go into forbearance, which temporarily postponed payments but allowed interest to continue accruing. Some borrowers were even encouraged to enter forbearance repeatedly rather than begin income-based repayment.– Navient denies all wrongdoing –Navient is fighting the lawsuits and claims it “will vigorously defend against these false allegations and continue to help our customers achieve financial success,” and has also claimed in its own defense that “There is no expectation that the servicer will act in the interest of the consumer.”– The lawsuits draw parallels to the subprime mortgage crisis –“My investigation found Sallie Mae put student borrowers into expensive subprime loans that it knew were going to fail,” said Illinois Attorney General Lisa Madigan, and both Navient and Sallie Mae are accused of steering borrowers into risky loans which had high risks of default.