Student loans are a great way to go about covering your tuition costs and additional expenses incurred while getting your degree. We all know that paying student loans is a pain. It goes without saying so are the loan servicers. Navient, formerly known as Sallie Mae, is one of the largest loan servicers employed by the Federal Government of the United States with its services extending to over 12 million people and a total amount of around $300 billion in federal and private student loans.
In the recent years, Navient is facing lawsuits from different organizations, such as Consumer Financial Protection Bureau(CFPB), attorney generals of different states, also a teachers’ union group and a lot of class-action lawsuits. However, it is unlikely to affect you in case you have Navient as your loan servicer as these lawsuits take many years to conclude and become fruitful.
Table of contents
- Who is Navient
- What is a Lawsuit and the Lawsuits against Navient?
- History of lawsuit
- Navient’s response
- How to check if your student loan provider is Navient
- File a complaint against Navient
- How to switch from Navient
Who is Navient?
Navient is one of the nation's largest federal student loan servicer. They also provide asset management and business processing solutions to a number of education, healthcare, and Government clients. The government entities they deal with range from the federal, local and state levels.
There have been a number of lawsuits filed against them and they have a history of unhappy borrowers who complain about the way they had their loans serviced by Navient.
What is a Lawsuit?
A Lawsuit happens when the party or parties take up the proceedings in the court of law.
Many organizations approached the court with lawsuits against Navient claiming that Navient misled the borrowers and provided them with wrong insights and options. Let’s take a look at where this all began and how we got to where we are today.
Some of the lawsuits are described below -
Lawsuit By CFPB
The Consumer Financial Protection Bureau, in January of 2017, sued Navient that it failed to act in its Consumers’ best interests. The CFPB alleges Navient of the following:
Not acknowledging and not processing their consumers’ payments properly
Directing their struggling borrowers into multiple forbearances instead of letting them into income-driven repayment plans
Incorrect Reporting of Loans to the Credit Bureau
Deceived private loan lenders of their cosigner release requirement
Provided unclear information about their re-enrollment in the Income-Driven repayment plans and their renewal deadlines
Discredited the disabled people which included the injured veterans
In August 2017, Navient’s motion for this lawsuit to be dismissed was denied by a federal judge.
Although Navient says that the CFPB’s claims are “unfounded”, the CFPB is asking Navient for compensation to the affected borrowers.
Different State Lawsuits
The attorney generals of below states filed lawsuits with similar claims as that of the CFPB lawsuit:
Illinois in January 2017
Washington in January 2017
Pennsylvania in October 2017
California in June 2018
Mississippi in July 2018
Along with the allegations that are similar to that of the CFPB, these lawsuits further claimed Navient to stop their allegedly unlawful practices and asking the court to impose penalties from $1000 to $10,000 per each violation. Depending on how it goes the borrower might seek some compensation as well.
American Federation of Teachers Lawsuit
A member from the second-largest Teachers Union called the American Federation of Teachers filed a class-action lawsuit in October of 2018. With allegations similar to that of the above lawsuits, it also claims that Navient purposely stopped loan borrowers from enrolling Public Service Loan Forgiveness, a payoff plan with a span of 10 years which was offered by a rival servicer, FedLoan.
This has reportedly caused many social workers, nurses, teachers, first responders, and other people to pay millions extra than what they actually should in student loan payments.
Instead of promoting the PSLF, Navient recommended less effective remedies such as forbearance, etc in which Navient displayed ignorance of its borrower’s best interests which is a violation of Navient’s contract with the government. This lawsuit demands millions of dollars for the damages that Navient has caused for the loan borrowers.
Many lawsuits were launched by individuals even regarding debt collection practices employed by Navient. One such lawsuit alleged that Navient still put his loan in default although he had paid the full amount. Another class-action lawsuit claims that Navient put debt collection lawsuits against consumers in Maryland despite being not licensed in Maryland. Though many lawsuits were claimed they were either dismissed or both the parties reached a private settlement.
History of Lawsuit
1. The CFPB filed the lawsuit against Navient for directing the student to make higher payments.
2. Also processing payments that were incorrect
3. The details given for cosigner release were false.
Looking for student loans? Find the best student loans for you.
Navient’s response to the Lawsuits
Like any other company facing lawsuits, Navient also responded by saying that there was no wrongdoing from their side and their service was to the best of their ability.
It also says that sending borrowers to forbearance would in no way give profits to the servicers and sending borrowers to forbearance would help them in getting an income-driven plan. It also posted in its online site an article with the following claims:
The borrowers serviced by Navient are 37% less likely to go into default than their competitors.
53% of the Federal Loan Borrowers are enrolled in an Income-Driven Repayment Program which is much more than its fellow competitors.
And Navient says there’s a good reason why it recommends forbearances so often to borrowers. It explains that forbearance is often a required tool to help people eventually become eligible to enroll in IDR plans.
It also says that servicers are paid up to 60% less for borrowers in forbearance. In other words, it would have no financial incentive to recommend a forbearance over IDR.
In short, Navient feels like it’s being picked on in these suits. It contends that it hasn’t done any worse than the other federal student loan servicers — and that they’ve often done better.
How to check if your student loan servicer is Navient?
Still in doubt, whether Navient is your student loan servicer, here's how you can find out -
You can log onto the Federal Loan Website and check your loan details including your “current ED provider”.
If no record of your loans is on the Federal Student Aid Website then your loan is a private one. Just check your previous loan statement. The sender is your loan servicer.
If your loan servicer is Navient and is facing a similar issue as the issues in the above lawsuits, you do not need to join or file a separate lawsuit. If you are one of the victims, you will be compensated at the end in case your cause wins against the company. Meanwhile, you can change your loan servicer by opting for loan refinancing. However, your loan cannot be forgiven as Navient does not provide any loan forgiveness.
If you want loan forgiveness, then you can apply for the Federal Loan Forgiveness program.
You cannot stop continuing to pay your loans just because a lawsuit was filed against the company. However, if you are not being properly treated by your service provider you can take the following steps:
File a complaint against Navient
You can file a complaint at Consumer Financial Protection Bureau or your respective state’s attorney general office, in case you are not satisfied with Navient and want to take further action. The information that you give can prove helpful in their fight against Navient.
You cannot stop continuing to pay your loans just because a lawsuit was filed against the company. However, if you are not being properly treated by your service provider you can go ahead and -
Get an attorney
You can consider visiting an attorney in your area for a free initial consultation in case your issue is not covered in the above lawsuits. They can help you get to know your rights, if they have been violated and what action you can proceed with further. They can even help you file a class action suit if possible.
Refinancing your loans
You can refinance your loans but you can end up losing all your privileges including for student loan forgiveness programs such as PSLF. Refinancing your student loans is a great way to manage your student loan debts but it is advised to have an in-depth understanding of what refinancing has to offer in order to take advantage of it. Find the best companies to refinance your student loans with.
If you are currently not happy with your loan servicer then you can consider refinancing as one of the ways to switch your loan servicer.
How to switch from Navient
1. By considering federal student loan consolidation or private student loan refinancing, it is possible to switch to other lenders.
2. Before switch always calculate the new rate of interest which you will be paying after the refinancing process.
3. You can file a complaint, if you're not satisfied with the services provided by them.
4. The other possible lenders you can choose are - Earnest, Sofi,commonbond, education loan finance,lendkey,penfed,citizensone
Navient decides to make some improvements to provide better service to their customers
Navient decides to improve their services by providing better service via call centers. Navient commences taking the responsibility to provide information regarding loan forgiveness to the eligible candidates. In June 2020 settlement, public service workers will be considered for the forgiveness program. Reports say, $1.75 million was provided as part of student loan counseling to public service workers in 2020. Navient also has the reduction program where the interest rates can be reduced to even 1 percent, please contact Navient to have more details and check the eligibility criteria for the same.