Katie Brazis
August 2017

What’s Going On With the Navient Lawsuits?

Navient got a lot of media attention back in January when the Consumer Financial Protection Bureau first filed their lawsuit against them. Two states — Washington and Illinois — joined in and filed their own lawsuits soon after.

Since then, Navient has filed to get all three lawsuits dismissed. So far, two judges have rejected the dismissal requests, leaving only the judge in Illinois still deliberating. The Washington and CFPB cases will go to trial, but some people suspect that Navient will settle before that.

Why the Navient Lawsuit Matters

Navient is the largest student loan servicer with a $300 billion student loan portfolio servicing 12 million borrowers. They were on the short list for the position of sole federal student loan servicer before that competition was canceled. If the move to a single servicer is revisited, Navient will likely jump back to the top three.

Federal student loan borrowers rely on communication and cooperation from their loan servicer. When that doesn’t happen, it jeopardizes the financial security of the more than 44 million borrowers in America. Bad advice, poor communication, and sloppy practices form the basis of the Navient lawsuit filed in January. Specifically, CFPB accused Navient of

  • Incorrectly applying payments
  • Steering borrowers away from cost-saving repayment programs and into forbearance where interest would continue to accrue
  • Failing to effectively remind borrowers of annual deadlines to remain in cost-saving repayment plans
    • The email reminders they did send about recertification had no urgency and merely suggested that the borrower check their account for a new message.
  • Overcomplicating the process to release a co-signer
    • Releasing a co-signer requires a set amount of on-time payments; Navient systems reset that counter if the borrower paid extra to get ahead of schedule.
  • Misreported default status of veterans
    • Veteran borrowers complained that their accounts were mislabeled and reported to the credit bureaus as defaulted, harming their credit.

Recent Activity

Navient’s initial response to the lawsuit was that their duty is to collect money for the federal government, not to help consumers: “There is no expectation that the servicer will ‘act in the interest of the consumer.’”

U.S. District Judge Robert Mariani, the judge who rejected the request for dismissal of the CFPB lawsuit, pointed out that Navient’s statement directly contradicted other statements in their CEO’s blog: “At Navient, we make it a priority to educate our federal borrowers about income-driven options. … These programs are our primary tool in helping borrowers avoid default. As a result, we are a leader enrolling borrowers in these programs.”

We’re still waiting to hear whether the request for dismissal in the Illinois lawsuit will be rejected like the other two.

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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Katie Brazis

Katie is a Content Coordinator with a BA in English and a Certificate in Editing and Publishing from CSU, Chico, and a Certificate in Copyediting from UC San Diego Extension. In addition to her professional history in editing, she has a deep love of stories. In her free time — when she’s not trying to tame the wild beast she calls her cat — Katie consumes stories in any form. She reads books and watches shows and movies. She plays cooperative games, both video and board, with her husband and friends. When she chooses to venture outside she keeps her phone handy to catch some virtual Pokemon.

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