In 1973, Sallie Mae, a favored student loan entity was set up by the government that serviced federal education loans. Sallie Mae originated federally guaranteed loans under the Federal Family Education Loan Program (FFELP). Sallie Mae later became private, offering private student loans, while servicing and collecting federal student loans for the Department of Education. In 2014, Sallie Mae spun off its loan servicing operations to what is now the largest servicer and collector of federal student loans - Navient Corporation.
Today, you may be in that large group of 44 million borrowers collectively owing $1.48 trillion in student loan debt. Navient manages nearly $300 billion in student loans for more than 12 million people. In Colorado, there are 761,000 people who owe $24 billion in student debt. One Colorado representative is currently working with the Colorado Attorney General’s office on a bill to license student loan debt collectors. The state regulates home mortgages, auto loans and payday loans, but not student loans.
If you have a loan with Navient, there are several lawsuits you should be following carefully. The outcome may affect your student loan.
Last week another lawsuit was filed in California by the Attorney General’s office against Navient and two of its subsidiaries, Pioneer and General Revenue Corporation. The lawsuit alleges the companies regularly pushed “borrowers to postpone payments through forbearance, an option in which interest continues to accrue, rather than enroll in an income-driven repayment plan that would avoid fees.”
It is widely thought Navient would steer borrowers into forbearance because there was very little paperwork whereas enrolling a borrower in a low-cost plan tied to a percentage of income required substantial paperwork and time.
The lawsuit also claims Navient and its subsidiaries violated California law by providing false information about collection fees to people who were trying to get out of a default, and inaccurately telling borrowers that disability loan forgiveness required a permanent inability to work - knowing no such requirement exists. The California Attorney General stated “Our students can’t afford to be cheated out of any more money that they legally owe simply because Navient knew how to game the system.”
Navient is facing similar lawsuits in Illinois, Washington and Pennsylvania along with another lawsuit filed against them by the Consumer Financial Protection Bureau (CFPB). The CFPB also alleges Navient ignored borrowers’ complaints and incorrectly reported borrowers’ accounts “in default” when the loan was in relief (disability discharge program) hurting the borrowers’ credit score.
In 2014, Navient settled a lawsuit with the Justice Department for overcharging military service members. Navient had to pay out $60 million to the 78,000 service members.
If you have experienced issues with Navient or its subsidiaries, you can submit a complaint with the CFPB and/or the Department of Education. You can also call our law office to see what alternatives may be available to you if you’re struggling with student loan debt. Our experienced student loan and credit attorneys may have other options to help with repayment, settlement, forgiveness, consolidation, loan rehabilitation and default resolutions.
To schedule a consult with our student loan and credit attorneys, call 303-618-2122 or visit our webpage on student loans and credit dispute and repair. For information regarding our other practice areas, visit www.gantenbeinlaw.com.
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