Navient Student Loan Lawsuits Update

Recently, student loan giant, Navient, agreed to voluntarily suspend collection activities on the debt of certain borrowers who have filed for bankruptcy while a lawsuit filed by the Consumer Financial Protection Bureau is pending in court. The CFPB alleged that Navient “systematically and illegally [failed] borrowers at every stage of repayment” by creating obstacles, incorrectly processing payments, cheating borrowers out of their rights to lower payments, and by partaking in other illegal and deceptive activities.

The voluntary suspension of collection activities affects borrowers who filed for bankruptcy after October 2005 and used the money borrowed to attend non-accredited programs. Under this agreement, Navient is still allowed to send borrowers monthly statements but the company will no longer aggressively pursue the debts during the remainder of the trial.

The CFPB lawsuit is just one of several that have been filed against Navient this year as a result of the company’s student loan practices. The company was also sued by the Attorney General in Illinois and Washington for its deceptive and predatory behavior regarding student loans. The accusations in these lawsuits all stem from the company’s use of subprime loans and predatory behavior.

In the lawsuit brought by the Illinois Attorney General, the complaint alleges that Navient failed to perform its core duties in servicing over $300 billion in student loans for more than 12 million borrowers. It further alleges that the company did not inform struggling borrowers about available repayment options and failed in its duties as the primary contact of information to federal student loan borrowers. Moreover, the company allegedly engaged in unfair and deceptive debt collection practices and repeatedly misled borrowers as they struggled with their loans.

In the lawsuit brought by the Washington Attorney General, the complaint alleges that Navient improperly steered struggling student loan borrowers toward short-term forbearances and engaged in aggressive and misleading collection tactics. Forbearance allows borrowers to have their payment temporarily suspended by the lending company. However, interest continues to accumulate on the debt and is added to the loan principal when the borrower resumes payments. Navient also allegedly engaged in improper and deceptive collection tactics, which included harassing phone calls and attempts to collect based upon incorrect information, among others.

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