When Sallie Mae split back in 2014, one of the emerging companies was Navient. Navient is responsible for collecting debt and generally servicing 12 million borrowers. The loan servicer is dealing with around $300 billion worth of student debt with its 6,000 employees.The scope of Navient’s service cannot be underestimated. They are servicing 25% of total student loan borrowers in the U.S. Such a huge scope is hard to handle. Therefore, it is not surprising that there are always some groups of people unsatisfied with their service. Unfortunately, the company frequently faces allegations from individual borrowers and organizations regarding malfunctioning. Each Navient lawsuit has similar claims, like failing to guide, misinformation, deceptive actions, etc.
Besides, Navient’s relationship with the government and Education Department is also complicated.
This guide presents details you should be aware of regarding Navient lawsuits. In addition, we advise you on strategies to avoid any challenges raised due to the wrongdoings of loan servicers.
Navient vs. Education Department
A Navient lawsuit with the Education Department started long ago- in 2009. At that time, Navient was still part of Sallie Mae. After some investigation against Sallie Mae, an Education Department investigator found out that Sallie Mae overcharged the government. However, Navient (Sallie Mae) denied any wrongdoings and continued fighting against refunding the money.
Years later, in 2021, the ED demanded the overpayments back – worth $22.3 million. The judge decided that this demand was reasonable and required Navient to meet the obligation.
Navient, on the other hand, claimed that all their procedures were in accordance with the ED’s guidelines.
- Elizabeth Warren vs. Navient
Senator Elizabeth Warren is one of the parties that talked against Navient several times. During the discussions on the overpayment issue, Warren repeatedly mentioned that Navient (allegedly) boosts its profits by misleading students, and they evade accountability. Besides, she noted that refunding $22.3 million according to the above-mentioned Navient lawsuit is a good start, but Navient should be fired.
After a few months, in April 2021, Warren again criticized Navient and its president J. Remondi in a hearing. She once again noted that the government should fire this loan servicer. After the hearing, she even tweeted about her thoughts:
In turn, J. F. Redmondi said that Senator’s allegations were not based on the facts and Navient always followed the laws and regulations.
Navient vs. Consumer Financial Protection Bureau (CFPB)
Navient lawsuit with CFPB has been an ongoing issue since 2017. Consumer Financial Protection Bureau is an organization that protects consumer rights, including student loan borrowers. It alleged that Navient failed to protect consumers because they misled students on repayment plans, provided incomplete information, processed payment wrongly, etc.
In 2020 June, Navient filed a summary judgment. Such judgment is a demand to conclude the Navient lawsuit as there is not enough evidence. The Navient claimed that the CFPB is still incapable of finding reasonable evidence after such a long time.
Attorney General of Washington vs. Navient
Attorney General Bob Ferguson started another Navient lawsuit in 2017 with similar claims. As the Attorney General got worried about the huge debt of Washington people, he said that it is necessary to keep parties accountable for their unfair treatment against borrowers. He claimed that Navient engaged in unlawful practices, as listed below.
Navient should distribute loans to students who have a high chance of repaying them. Allegedly, Navient loans were granted even those that had less than 50% of chance to graduate. The Attorney General claimed that Navient knew the borrowers would fail repayment and still distributed loans.
When student loan borrowers face financial challenges, they have some options to resolve the issue. For example, they can request loan forbearance, which will stop repayment for some time. However, this option is a short-term solution. After a few months, repayment will resume. A better option for long-term challenges is moving to a more affordable repayment plan such as Income-Driven repayment.
The Attorney General claimed that Navient misled borrowers-in-need by directing them to forbearance instead of helping them to apply Income-Driven repayment plans.
Failure to Guide
Loan servicers should help borrowers to meet their obligations by keeping constant communication. This Navient lawsuit alleged that Navient employees did not inform borrowers about employment recertification in the Income-Driven repayment plans. Those who failed to re-certify were obliged to make excess payments due to Navient’s mistake.
Failure of Co-signer Release
A co-signer is a friend or family member who takes responsibility for repayment if you fail to repay the debt. Meanwhile, a Co-signer Release is an additional feature to loan. For example, you can release the co-signer if you repay the debt on time for nine months.
The investigation claimed that Navient deceived borrowers about the Co-signer Release. When borrowers meet the conditions to release co-signers, Navient created additional challenges not to release the co-signer.
Another Navient lawsuit claim was that the loan servicer pressured delinquent borrowers to pay more than the necessary amount. This amount was known as “Present Amount Due.”
July 2021 Update
After five years, the judge of this Navient lawsuit ruled against Navient on some claims. According to the lawsuit, the judge accepted that Navient misled borrowers about the Co-signer Release and failed to inform them about the difficulty of this benefit. Besides, Navient violated consumers’ rights by promoting this feature for private loans but not disclosing properly how it is implemented.
However, other claims are still discussed, and another Navient lawsuit trial is scheduled for April 2022.
New Jersey Attorney General vs. Navient
New Jersey Attorney General Grewal started another Navient lawsuit. The claims against Navient were again similar to other lawsuits, which is why Navient referred to them as “recycled baseless allegations.” In general, the New Jersey Attorney claimed that Navient only wants to generate profit and ignore borrowers’ struggles.
Claims against Navient
This Navient lawsuit also involves similar claims. For example, allegedly, Navient misled students and directed them to the forbearance option rather than enrolling them in Income-Driven repayment. Missing recertification for an Income-Driven Repayment plan is another well-known claim.
The Co-signer Release difficulty is among the claims, too. The lawsuit alleged that Navient makes its offers more attractive with this feature but then creates barriers not to release the co-signers. Finally, Navient used tricky language to collect more than necessary amounts from the borrowers.
You should remember that fraudulent and unlawful activities mentioned in this guide are only allegations, although a few of them got accepted. There is still a long way till allegations are proved or rejected.
In response to this Navient lawsuit by the New Jersey Attorney General, the loan servicer mentioned that the lawsuit was based on similar allegations which had no fact-base. Against the repayment plan allegations, the loan servicer noted that more than half of their loan portfolio is enrolled in affordable Income-Driven repayment options.
What is an Income-Driven Repayment Plan?
While discussing Navient lawsuits, whether, with New Jersey or Washington Attorney General, we frequently mentioned Income-Driven repayment plans among allegations. If you wonder why Income-Driven plans are important, here is a brief introduction.
The federal government provides multiple repayment plans for borrowers. Hence, borrowers can choose how much they want to pay monthly or how long they want to repay the debt. Among these plans, Income-Driven repayment options are known for their affordability.
These repayment options are based on income and family size. For example, you might be required to pay 10% of your discretionary income as a monthly loan payment amount. It means, if you earn less, you will pay less, which makes this repayment option affordable.
Income-Driven repayment plan has four types, such as Revised Pay as You Earn, Income-Contingent plan, etc. Make sure you read about each of them to choose the most suitable repayment option.
What You Should Do for Your Student Loans
Borrowers rely on their loan servicer regarding their loan issues. However, as visible from each Navient lawsuit, loan servicers might not always provide the best help.
These lawsuits should be a good reminder for you to check your student loans, understand repayment plans, and confirm that your payments are applied properly. Besides, do not leave your student loan status unmonitored. In case you have any questions, contact your loan servicer.
Do Your Research
Why? Because loan servicers can fail to suggest the best debt resolution strategy. Get familiar with repayment plans, forbearance/deferment options, loan forgiveness, and discharge programs. You can even get help from a third-party debt expert, like those in Forget Student Loan.
Confirm in Writing
When facing an issue, your gut instinct might lead you to call the loan servicer. This method can be the fastest way to communicate with the servicer. However, it is advisable to write to the loan servicer as writings can always be used as evidence in the future if any problems occur. Also, keep any papers you receive from the loan servicer.
Do not be Afraid of Raising Your Voice.
If you believe the loan servicer treats you unfairly, you can always file a complaint. Even if you hesitate to stand against such a vast corporation alone, there exist a lot of organizations that can support you:
- Your lender
- State Attorney General
- State Education Department
- Consumer Financial Protection Bureau, etc.
However, before filing a complaint, make sure you talk to your loan servicer first. Also, as mentioned, do not forget to document your communication.
How to Change Loan Servicer?
If you are fed up with your loan servicer or lender, you can get rid of them. Student loan refinancing works perfectly for this purpose. Refinancing happens when you get a new loan. Then you use the money to pay out the existing loan. As a result, you no longer deal with existing loan servicers. Instead, now the new lender is responsible for servicing your loan.
However, if you have federal loans, think twice before refinancing. If refinanced, your loans lose eligibility for federal aid programs like forgiveness programs. Changing loan servicer might not be worth it if you are currently enrolled in forgiveness opportunities such as Public Service Loan Forgiveness.
For more information regarding student loan refinancing, you can check our blogs.
Final Words on Navient Lawsuit
Loan servicers are supposed to help borrowers and guide them for effective repayment. Navient deals with 12 million borrowers in need of guidance. It is not always easy to satisfy each borrower’s needs and ensure proper service with such a huge scope.
Unfortunately, the recent Navient lawsuit by the New Jersey Attorney General or ongoing lawsuit by the Washington Attorney General indicates that Navient might have failed to provide excellent service. To avoid any issues regarding loan servicer, make sure you have complete control over your loans, know your debt repayment strategies, and document any communication with the loan servicer. In case of unfair treatment, do not hesitate to raise your voice.