Mike Davies
April 2017

Navient Says They Aren’t Required to Help Borrowers

Navient says they, “do not owe borrowers any specific fiduciary duties based upon their servicer/borrower relationship.”

Earlier this year, Navient has been sued by Consumer Financial Protection Bureau, CFPB. CFPB alleged Navient illegally misrepresented borrowers and that, “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.” Navient was accused of leading borrowers who struggled with their monthly payments toward a forbearance and away from income-driven repayment plan.

Navient, the largest student loan servicer in America, believe they simply exist to collect your monthly payments and the rest is up to the borrower to decide. As stated in Navient’s latest filing to have the federal lawsuit dismissed.

“There is no expectation that the servicer will act in the interest of the consumers,” Navient said in the March 24 filing, adding that courts routinely agree that servicers and lenders “do not owe borrowers any specific fiduciary duties based upon their servicer/borrower relationship.”

A chilling statement for those who have student loans. This is nothing more than a confirmation that loan servicers, in general, have their own interests at hand and have no interest in presenting the best solutions to student loan borrowers. This statement contradicts a previous statement put out in a blog post where Navient CEO Jack Remondi said, “At Navient, our priority is to help each of our 12 million customers successfully manage their loans in a way that works for their individual circumstances.”

Navient is now arguing that they simply aren’t required to help by law. They go further to say in their filing that they are only paid by the Education Department to collect payment from the borrower and to render any extra services they would need a new contract to reflect extra payment for extra work.

“It’s rare for a company to be this bold,” said Jenny Lee, a former CFPB attorney now with the law firm Dorsey & Whitney LLP in Washington. “It’s a sound legal argument, but it may not be the best public relations argument.”

Consumer advocates started firing back at Navient. “What this means for the Education Department is that it needs to fire Navient,” David Bergeron, former deputy assistant secretary of Education and director of the Office of Postsecondary Education at Dept. of Education.

Rohit Chopra, the former assistant director and student loan ombudsman at the CFPB, told Bloomberg that he has never seen a loan servicer argue that they weren’t obligated to provide borrowers with options. After reading their filing, Navient might reply that they had provided options, but maybe not every option. “When consumers call their servicers, they’re not expecting them to withhold information,” Chopra said.

Jenny Lee also said, “If a company does too good of a job advertising how consumer-friendly it is, the CFPB could use it as evidence against the company—in that it created this reasonable expectation that consumers can rely on the company.” An argument which could tip the scales back on the side of CFPB and borrowers.

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Mike Davies

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