Navient Lawsuit: What You Should Know (2019)

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Navient, formerly part of Sallie Mae, is facing six lawsuits alleging illegally cheating borrowers out of repayment rights through shortcuts and deception. The formal Navient Lawsuit against Navient can be seen here.

What is Navient?

Navient is a U.S. corporation based in Wilmington, Delaware, whose operations include servicing and collecting on student loans. Managing nearly $300 billion in student loans for more than 12 million debtors, the company was formed in 2014 by the split of Sallie Mae into two distinct entities, Sallie Mae Bank and Navient. Navient employs 6,000 individuals at offices across the U.S. As of 2018, Navient services 25% of student loans in the United States (Wikipedia).

Student loans make up the nation’s second-largest consumer debt market. Today there are more than 44 million federal and private student loan borrowers and collectively these consumers owe roughly $1.4 trillion.

What is the Navient lawsuit?

The U.S. Consumer Financial Protection Bureau and the Illinois and Washington attorneys general sued Navient in January 2017.  Pennsylvania’s attorney general filed a suit in October 2017. The California and Mississippi attorneys general filed suits in June and July 2018, respectively. They are suing, Navient, formerly part of Sallie Mae, for creating obstacles to repayment by providing bad information, processing payments incorrectly, and failing to act when borrowers complained.

Through shortcuts and deception, the company also illegally cheated many struggling borrowers out of their rights to lower repayments, which caused them to pay much more than they had to for their loans. The Bureau seeks to recover significant relief for the borrowers harmed by these illegal servicing failures (CFPB).

In this Navient lawsuit, they are alleged of the following mispractice:

  • Failing to correctly apply or allocate borrower payments to their accounts.
  • Steered struggling borrowers toward paying more than they have to on loans.
  • Obscured information consumers needed to maintain their lower payments.
  • Deceived private student loan borrowers about requirements to release their co-signer from the loan.
  • Harmed the credit of disabled borrowers, including severely injured veterans.

The Consumer Financial Protection Bureau also alleges that Navient, through its subsidiary Pioneer, made illegal misrepresentations relating to the federal loan rehabilitation program available to defaulted borrowers. Pioneer misrepresented the effect of completing the federal loan rehabilitation program by falsely stating or implying that doing so would remove all adverse information about the defaulted loan from the borrower’s credit report. Pioneer also misrepresented the collection fees that would be forgiven upon completion of the program.

What is Navients’ response to these allegations?

Navient has stated that these allegations are unfounded according to a statement made on their website.

Is Navient student loan forgiveness real?

According to the Navient website, if Navient services one or more of your student loans. The terms of your loans remain the same. You should continue making payments on your loans as usual.

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