Mike Davies
January 2017

Government sues Navient, America’s Largest Student Loan Company

How do you know if this will affect you? “Every single one of the borrowers who is having their loans serviced by Navient or one of Navient’s companies or is a borrower who is impacted by their debt collectors has the potential to be impacted.”

A recent lawsuit has been filed against Navient for mistreating student loan borrowers. Accusations against the loan servicer are that they have coaxed their struggling borrowers into repayment plans that required them to pay more monthly than was completely necessary. In addition, they have failed to comply with how borrowers wanted their payments to be allocated. For example, if a borrower wanted to pay extra, the borrower may want the extra money to go to the total principal balance which would lower the loan amount faster. One thing Navient would do would be to apply the extra money as a credit for the next month’s payment, which keeps the loan amount high and by doing so would mean the borrower pays more money over time because of the interest applying to a higher principal amount.

“Navient erroneously reported borrowers had defaulted on their loans, damaging their credit score.”

CNNMoney (http://money.cnn.com/2017/01/18/pf/college/navient-sallie-mae-sued-cfpb/index.html)

Student loan payments are reported to credit reporting companies. One of the accusations against Navient is the fact they have misreported borrowers defaulting on loans. According to Consumer Financial Protection Bureau (CFPB), Navient had reported that specifically, severely and permanently disabled borrowers, who have the right to seek loan forgiveness under the federal Total and Permanent Disability discharge program, were reported as defaulting when their loans had not.

CFPB also states that Navient, trough Pioneer, their subsidiary, made illegal misrepresentations in relation to the federal loan rehabilitation program that is avail be for defaulted loan borrowers. The misrepresentation was that in completing the federal loan rehabilitation program would remove all adverse information about the defaulted loan from the borrower’s credit report. They also stated that collection fees would be forgiven when the program was completed, which was another misrepresentation.

“Navient steered struggling borrowers toward paying more than they had to,”

CNNMoney (http://money.cnn.com/2017/01/18/pf/college/navient-sallie-mae-sued-cfpb/index.html)

The suit was filed by the Consumer Financial Protection Bureau (CFPB) but the attorneys general of Illinois and Washington also filed their own lawsuits against Navient on the same day.

“At every stage of repayment on student loans, Navient has failed to follow the law and caused borrowers needless anxiety and aggravation,” CFPB director Richard Cordray said on a conference call with reporters. “Borrowers and the CFPB have reason to expect better from the nation’s largest student loan servicer.”

Borrowers have the right to income-driven repayment plans when they can’t afford their standard payments. CFPB believes that Navient specifically steers borrowers into forbearance which doesn’t help the borrower who simply can’t afford payments. A forbearance is a tool if you need to take a short break from payments. Interest still accrues during forbearance, so if a borrower cannot afford monthly payments they will be digging themselves a larger hole with interest.

“The government also claims Navient made it harder for borrowers to enroll in an income-driven repayment plan,”

CNNMoney (http://money.cnn.com/2017/01/18/pf/college/navient-sallie-mae-sued-cfpb/index.html)

Of the borrowers who were successful in enrolling into income-driven repayment plans need to recertify every year to update their income and family size. However, the emails that Navient sends to notify the borrowers does not adequately inform the borrower of the critical deadlines and consequences if they failed to act on their recertification. Navient was also accused of obscuring renewal notices in emails that were sent to borrowers that failed to alert them adequately that they need to renew. Because of this, many borrowers did not renew their repayment plan and lost their affordable monthly payments. This caused their payments to jump up to expensive standard payments that could be to the amount of hundreds or thousands of dollars. If this happens, accrued interested is added to the borrower’s principal balance and they also may lose their other protections, including interest subsidies and progress toward loan forgiveness.

Navient released a statement, “The allegations of the Consumer Financial Protection Bureau are unfounded, and the timing of this lawsuit — midnight action filed on the eve of a new administration — reflects their political motivations.” They will be fighting the claims in court and have claimed that Navient educated their borrowers about their options.

Of course, this is off the back of a 2015 lawsuit in which Navient agreed to pay $60 million to settle that they were overcharging servicemembers with interest. Their issues date back further to 2009 before Navient existed and the company operated under Sallie Mae. Despite all this Navient remains one of the largest student loan servicers in the country.

How do you know if this will affect you? “Every single one of the borrowers who is having their loans serviced by Navient or one of Navient’s companies or is a borrower who is impacted by their debt collectors has the potential to be impacted,” Lisa Madigan, the attorney general of Illinois, said on a conference call with reporters. If you have Navient, make sure they are treating your loans properly, and keep a close eye on this case.

If you want to keep something like this from happening to you then seek help with a trusted company that deals with these loan servicers every day. Ameritech Financial helps you enroll and gain approval from government debt relief programs. Ameritech Financials number one goal is complete customer satisfaction and pledges to help every one of their clients in the best and most effective ways possible for each individual client. Ameritech Financial is not affiliated with the government or your loans servicer so you know you aren’t going to get the run around about like you would from your loan servicer. The staff at Ameritech Financial has experience dealing with loan servicers and knows their tricks, Ameritech Financial work for you and with you. Ameritech Financial even protects you by placing your payment to Ameritech into a dedicated account provider. Meaning, it keeps your money safe until the work Ameritech Financial promises to do for you is done. Don’t let loan servicers bully you around, reach out to Ameritech Financial where they are always looking out for your needs and wants.

Options are available to help

Most people do not realize that there are programs designed to help those who may be struggling with their student loan payments. Thousands of borrowers have trusted Ameritech Financial to be their advocate. Click here to find out what options are available. Our services could help you get back on track.

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Mike Davies

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