The U.S. Government Has Sued America’s Largest Student Loan Company For Fraud And Incompetence

01.18.17 5 months ago

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Nobody likes their student loan provider. It’s just a fact of life. Even the nicest provider sends you a monthly reminder that you will be paying for college until probably the end of your natural life span. So a wave of schadenfreude has blown across the country as one of the pieces of the former Sallie Mae, Navient, is being hauled into court over some fairly extensive allegations.

According to Buzzfeed, the Consumer Financial Protection Bureau is suing Navient over allegations the company misled consumers, denied them lower repayment rates in favor of the company’s profits, and botched payment processing. Navient owns almost a quarter of the student loans in the US, meaning one in four of Americans with student loans are affected by the suit.

Navient is what’s called a “student loan servicer.” As the government isn’t equipped to follow up on the loans it issues, it contracts the work out to companies like Navient, which processes the loan payments and guides students through the loan system. So, in short, the CFPB is accusing Navient of not doing the job the government paid it to do. The bureau is looking for financial relief for student loan holders, which could potentially cost the company billions.

The core allegation is that Navient pushed students away from income-based repayment plans and towards “forbearance,” where loanholders temporarily stop making payments while interest collects. Forbearance saved Navient time and paperwork, but increased the total debt for students. It also stands accused of damaging the credit of individuals who have their loans discharged, which commonly include veterans, and deliberating misprocessing payments.

If Navient is hoping Trump will save the company, he likely won’t. In addition to the CFPB lawsuit, the Illinois and Washington state attorney general’s offices have both filed suit against the company. One way or the other, Navient appears to be headed to court.

(Via Buzzfeed & CNN Money)

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