Navient, the nation’s largest student loan company, has been sued by the Consumer Financial Protection Bureau (CFPB) for allegedly failing borrowers at every step of repayment.
The lawsuit, filed by the CFPB on Jan. 18, states “Navient has failed to perform its core duties in the servicing of student loans, violating Federal consumer financial laws as well as the trust that borrowers placed in the company.”
Navient, formerly a branch of Sallie Mae before becoming its own entity, has more than 12 million customers and handles over $300 billion in government and private student loans.
In a statement released by CFPB Director Richard Cordray on the day of the lawsuit, Cordray wrote "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 denied the allegations in a statement released on the Jan. 18, stating that the accusations were unfounded and that the timing suggests political motivations.
What the lawsuit alleges Navent did:
- Deterred numerous borrowers from access to benefits and protections associated with repayment plans.
- Mislead struggling borrowers into higher cost repayment plans that did not reflect their financial situation, causing overpayments.
- Intentionally failed to disclose renewal deadlines for repayment plans, causing affordable plans to expire and immediate cost hikes in payments.
-Damaged the credit of disabled borrowers by misreporting information to credit consumer agencies, making it look like the borrowers defaulted.
-Deceived borrowers about the ability to release co-signers from their loans.
The full lawsuit can be read here.