Editor’s Note: We will update this post as new information is released regarding the ongoing Navient lawsuits.
Navient is one of the nation’s largest federal student loan servicers. If you have federal student loans, there’s a good chance that Navient may be your servicer. Since 2017, Navient has been mired in a growing number of lawsuits, including suits from the Consumer Finance Protection Bureau (CFPB), several state attorney generals, and a group of teachers.
This guide will give you a quick history of the Navient lawsuits. It will explain briefly what they’re all about and what to expect moving forward.
Let’s take a look at where this all began and how we got to where we are today.
The CFPB lawsuit
In January 2017, the Consumer Finance Protection Bureau filed a lawsuit against Navient. The CFPB accused Navient of failing to act in its customers’ best interests. Among other things, the CFPB charged that Navient:
- Failed to correctly apply or allocate borrower payments to their accounts
- Steered struggling borrowers toward multiple forbearances instead of an income-driven repayment (IDR) plan
- Deceived private student loan borrowers about cosigner release requirements
- Reported loans incorrectly to the credit bureaus
- Failed to inform borrowers of IDR plan renewal deadlines
In August 2017, Navient filed a motion for the CFPB lawsuit to be dismissed. A federal judge denied the motion.
The CFPB lawsuit has been followed up with suits from the following states:
- Illinois (January 2017)
- Washington (January 2017)
- Pennsylvania (October 2017)
- California (June 2018)
- Mississippi (July 2018)
The allegations made by the attorney generals in each of these states are similar to those made by the CFPB.
In October of 2018, nine teachers filed suit against Navient. They were supported by the American Federation of Teachers, the second-largest teacher’s union in the United States.
In their lawsuit, the teachers allege that Navient misled borrowers in public service professions when they tried to access Public Service Loan Forgiveness (PSLF). In particular, these teachers claim that Navient attempted to keep borrowers from transferring their loans to FedLoan Servicing (the exclusive servicer for PSLF) in order to avoid losing the associated fees.
All of these lawsuits are ongoing. Each of the lawsuits are seeking financial compensation for misled borrowers. It’s important to note, though, that there’s no such thing as “Navient Student Loan Forgiveness.”
But if you’re a Navient customer, you may qualify for one of the federal government’s student loan forgiveness programs.
With the sheer amount of data that will need to be presented in these cases, it could take years before any of them are resolved. Stay tuned and we’ll keep you updated as things move forward.
From the beginning, Navient has been adamant that it has done nothing wrong and that it has serviced loans to the best of its ability.
In a rebuttal posted on its site, Navient responded to the CFPB’s allegations point by point. Here are two of its key claims:
- Borrowers serviced by Navient are 37% less likely to default than borrowers serviced by Navient’s peers.
- 53% of student loan balances serviced by Navient for the government are enrolled in income-driven repayment programs — more than any comparable servicer.
And Navient says there’s a good reason why it recommends forbearances so often to borrowers. It explains that forbearance is often a required tool to help people eventually become eligible to enroll in IDR plans.
It also says that servicers are paid up to 60% less for borrowers in forbearance. In other words, it would have no financial incentive to recommend a forbearance over IDR.
In short, Navient feels like it’s being picked on in these suits. It contends that it hasn’t done any worse than the other federal student loan servicers — and that they’ve often done better.
Despite its faults, Navient isn’t wrong in protesting that the student loan system as a whole is broken. As Travis Hornsby explained when Navient’s lawsuit first broke, these types of stories really shouldn’t be all too surprising.
The people working for federal loan servicers are overworked and often not given proper training. They may be too busy to give personalized advice to every borrower, so they “read from the script.”
And when the federal government first introduced the PSLF program in 2007, the Department of Education didn’t give a guidebook about how to handle it. Many servicers simply didn’t understand the rules.
Intent or incompetence?
In the suit being brought against Navient by the nine teachers, Jessica Saint-Paul, one of the plaintiffs, explains that she asked a Navient customer service representative about PSLF. She was told that she needed to make 120 consecutive payments in order to qualify.
Obviously, this is completely wrong, since PSLF payments don’t need to be consecutive. And you can imagine how being told something like that could discourage you from even pursuing PSLF in the first place.
So assuming this is true, was Navient wrong in this situation? Absolutely. But was Navient purposely giving this type of wrong advice to public servants on a regular basis?
Or did Navient just fail to properly educate a customer service representative who ended up later giving a borrower bad advice? Those are the kinds of questions these lawsuits will try to answer.
If your federal student loans are currently with Navient, these lawsuits may have you worried. But don’t panic. There’s a good chance your loan is being serviced exactly as it should be.
However, if you notice any problems with your student loans, contact Navient immediately. With all the bad PR Navient has dealt with over the past two years, it should be eager to fix mistakes.
How to switch servicers
Want to just switch student loan servicers altogether? Unfortunately, that’s not easy to do. The federal government only allows borrowers to switch servicers during a Direct Loan Consolidation.
You could also switch student loan servicers by refinancing your student loans. However, you’ll lose out on federal student loan benefits, including eligibility for student loan forgiveness programs like PSLF.
Finding competent student loan advice
Is Navient or any other federal loan servicer not giving you the personalized student debt advice that you need? If so, Student Loan Planner can help.
One of our Student Loan Planner consultants would love to talk through all the repayment strategies that may be available to you. Book a student loan consultation today.