USA TODAY International Edition
Suit says Navient cheated borrowers
Regulators allege student loan giant created obstacles
The nation’s largest student loan servicer was hit with a Consumer Financial Protection Bureau lawsuit over allegations it has “systematically and illegally” failed borrowers.
Navient, formerly part of Sallie Mae, created repayment obstacles for tens of thousands of student borrowers by providing incorrect payment information, processing payments incorrectly and failing to act when borrowers complained, according to the federal lawsuit filed Wednesday in the middle district of Pennsylvania.
The company also cheated borrowers out of their rights to lower repayments, according to the CFPB lawsuit, which seeks financial relief for student borrowers who were harmed.
“For years, Navient failed consumers who counted on the company to pay back their student loans,” CFPB Director Richard Cordray said.
Navient services the loans of more than 12 million borrowers, including more than six million accounts under a contract with the U. S. Department of Education. In all, the company services more than $ 300 billion in federal and private student loans.
The CFPB civil action also targets Navient Solutions, a company division responsible for loan servicing, and Pioneer Credit Recovery, a subsidiary that specializes in collections on loans that fall into default.
“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 ( U. S. presidential) administration — reflects their political motivations,” Navient said in a statement issued in response to the legal action.
According to the CFPB, student loans comprise the second- largest U. S. consumer debt market, with consumers collectively owing roughly $ 1.4 trillion on more than 44 million federal and private loans.
“For years, Navient failed consumers who counted on the company to pay back their student loans.” CFPB Director Richard Cordray