Navient, one of the nation’s largest student loan servicers, has settled a student loan forgiveness lawsuit. Here’s what you’d wish to understand – and what it means for your student loans.
If you’ve got a student loan, there’s an honest chance that Navient is your student loan servicer. Navient, which spun away from Sallie Mae, has quite 10 million student loan customers and services quite $300 billion of state and private student loans. The lawsuit, which was filed in court in ny in October 2018 by members of the American Federation of Teachers, the second largest teachers union within the U.S., alleged that Navient systematically misdirected borrowers into student loan repayment and forbearance programs once they really should are directed into the overall public Service Loan Forgiveness program. As a result, the plaintiffs claim they omitted on payments that might have qualified them for public service loan forgiveness, which enables public servants to possess their federal student loans forgiven after meeting certain requirements.
The teachers alleged that Navient ignored borrowers’ best interests and prevented borrowers from moving to FedLoan (the student loan servicer that administers the overall public Service Loan Forgiveness program), so as that Navient could still service their student loans and earn fees. As a result, the plaintiffs claim that they et al. like them who wanted to pursue public service loan forgiveness are collectively paying many dollars quite they otherwise should in student loan payments.
Student Loan debt crisis worsened after Navient thought that they could secure guaranteed repayment for their loans if they work as a lender, debt collection agency and loan servicer for any debts that are in default. As a result, they got their hands on all three of the roles in controlling the whole cycle of student debt. They were more interested in the loans that went into default so they could charge far more interest rates – as much as 15-25% compared to the loans that were still in repayment offering about only five to seven percent.
They were interested in giving loans to borrowers who had low credit scores and without the ability to repay the amount. Navient gave student loans to anybody who was willing to take it and ended up having over 12,000,000 customers across the United States and more than 300 BILLION dollars in private and federal student loans. The strategy worked very well for Navient; they reported a profit of over 250 million in 2017 – the same year they were hit with four massive lawsuits against them. It is not hard to imagine what they could accomplish if there were no Navient lawsuits.
Fortunately, the CFPB and some State Attorney Generals are all turning against Navient with massive lawsuits. The States Attorney Generals of Washington, Pennsylvania, and Illinois have all attacked Navient with three different lawsuits, while Consumer Financial Protection Bureau is suing the company with one lawsuit. Each of the Navient lawsuits is accusing the company of allegedly making student loan repayment process and the student loan servicing as expensive, confusing and painful as possible.
CFPB Lawsuit and Private and Federal Student Loans
The lawsuit brought by the CFPB does cover both Private and Federal student loans so that the lawsuits will help everybody regardless of the type of loans. The essential accusation from the Consumer Financial Protection Bureau’s lawsuit is establishing barriers to repayment by giving students misleading information, incorrectly processing the payments and failing to react when the students disagreed.