Student loans can be difficult to pay back, especially if the servicer is abusing its power.
Pennsylvania Attorney General Josh Shapiro has sued Navient Corp., the nation’s largest servicer of federal and private student loans. The lawsuit claims Navient has been “deceptive” and “predatory,” causing harm to student borrowers by putting profits “ahead of the interests of millions of families across our country who are struggling to repay student loans.”
The lawsuit was filed Thursday in U.S. Middle District Court.
“The more businesses like Navient put their bottom line ahead of the interests of their customers and consumers, the more vigilant we will be to protect Pennsylvanians and hold businesses like Navient accountable for their misconduct,” Shapiro said in a statement.
More than 1,000 complaints have been filed by Pennsylvanians against Navient with the Consumer Financial Protection Bureau, according to Shapiro, who said state residents owe more than $61 billion in private and federal student loans as of December.
The lawsuit claims Navient made predatory loans to students despite the unlikelihood of repayment. It also said Navient misled lendees and disregarded evidence that loans “would likely default at extraordinarily high rates.”
Navient released a statement saying the lawsuit’s allegations are “completely unfounded,” the case was filed without review of Pennsylvania resident’s customer accounts and the company complies with the rules that govern its student loan program..
“Navient is a leader in helping student loan borrowers succeed,” Navient said. “In fact, 49 percent of balances serviced by Navient for the government are enrolled in income-driven repayment plans and Navient-serviced borrowers are 37 percent less likely to default than those serviced by others. We will vigorously defend our record in court and are confident we will prevail following an impartial review of the facts. In the meantime, we will continue to provide industry-leading service to our customers.”
Navient should have helped borrowers apply for income-driven payment plans, Shapiro said, adding that the company instead steered students into short-term loan forbearances that continued in the long term. This allegedly enabled Navient to add $4 billion in interest charges from 2010-15.
The lawsuit requests full restitution to borrowers affected by Navient’s alleged unlawful practices, disgorgement by the company of unlawfully gained profits, civil penalties, rescission or reformation of all contracts between Navient and state residents affected by Navient’s practices and Navient to cease collecting on illegal loans.
Shapiro joined 18 attorneys general asking U.S. Secretary of Education Betsy Devos to halt a “systematic rollback of critical student loan protections for student borrowers.”
Borrowers who believe they have been affected by Navient’s alleged deceptive practices should file a complaint with the attorney general’s office at www.attorneygeneral.gov/Complaints/Consumer_Complaint_Form/. They can also call 800-441-2555 or email firstname.lastname@example.org.