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Navient Lawsuits: Student Loan Servicer Accused of Inflating Costs

Image: Navient Lawsuits: Student Loan Servicer Accused of Inflating Costs

A logo sign outside of the headquarters of the Navient Corporation in Wilmington, Delaware, on Aug. 29, 2015. (Kristoffer Tripplaar/Sipa via AP Images)

By    |   Thursday, 19 Jan 2017 04:43 PM

Navient was hit with lawsuits filed by a federal regulator and two state attorneys general on Wednesday, alleging the nation's largest student loan servicer illegally drove up costs for borrowers.

Among the charges, the Consumer Financial Protection Bureau accused Navient of amassing $4 billion in interest charges from January 2010 to March 2015 by pushing borrowers toward forbearance, in which interest continues to accrue, rather than less costly repayment plans, The Washington Post reported.

“Navient has systematically and illegally failed borrowers at every stage of repayment,” CFPB Director Richard Cordray told reporters on a call, per the Post. “These unlawful practices have cost student-loan borrowers across the country both heartache and money. And we are working to make sure they do not happen again.”

The complaint also alleges the company misled borrowers about the terms of repayment plans, misreported information to credit bureaus, and made misrepresentations about the federal loan rehabilitation program, the Post noted.

“The timing of this lawsuit — midnight action filed on the eve of a new administration — reflects their political motivations,” Navient said in a statement, according to the Post. “We cannot and will not accept agenda-driven ultimatums designed to get headlines rather than help for student borrowers. We will vigorously defend against these false allegations and continue to help our customers achieve financial success.”

Attorneys general in Washington and Illinois also sued Navient, which handles 12 million accounts including federal and private loans, CNN reported.

Navient is among nine companies that service federal student loans for the government.

Illinois Attorney General Lisa Madigan told CNN her office reviewed thousands of consumer complaints before filing its lawsuit, which also named Sallie Mae, from which Navient spun off in 2014.

Navient has been under scrutiny by consumer groups for years, The New York Times reported, adding that the CFPB lawsuit focuses on wrongdoing starting in 2010, and the state lawsuits reach back to 2000.

Twitter users reacted to the lawsuits.

 

 

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Navient was hit with lawsuits filed by a federal regulator and two state attorneys general on Wednesday, alleging the nation's largest student loan servicer illegally drove up costs for borrowers.
navient, lawsuits, loan, costs
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2017-43-19
Thursday, 19 Jan 2017 04:43 PM
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