City teachers sue loan servicer
Instructors say firm misled them about loan forgiveness
Baltimore City schoolteacher Michelle Means had been chipping away at her $60,000 in federal student debt and knew about a loan-forgiveness program Congress started in 2007 to help public servants.
Yet, each time she talked to representatives at Navient, a for-profit company that services loans for the U.S. Department of Education, she came away believing that she wouldn’t qualify for the program. Means, 32, said Navient advised her that she had to make 120 consecutive payments, without missing one or putting her loan in forbearance for even a month, before she would be eligible.
It turns out that was incorrect, she said. Earlier this month Means and eight other teachers sued Navient, saying the company steered borrowers like Means away from loans that would qualify them for the forgiveness program, while giving them false assurances they were on track for loan forgiveness and misstating the terms under which they would qualify.
Had she known that the 120 payments didn’t have to be consecutive, she said, “I would be very close to having my federal loans being forgiven.” The American Federation of Teachers, one of the largest teachers unions in the country, is paying the legal fees associated with the lawsuit for their members.
Navient, based in Wilmington, works under a contract with the U.S. Department of Education to service over $205.9 billion in federal student loans, owed by approximately 6.1 million people, according to the lawsuit. Navient declined to comment for this article.
A first-grade teacher in a West Baltimore elementary school, Means has undergraduate and master’s degrees. Even though she commutes from Southern Maryland each day, she said she stays at the school because she has built strong relationships with families and students. “I have had opportunities to go elsewhere. I feel I am valued here,” she said.
Congress passed a loan forgiveness program for public servants that allowed certain government employees such as teachers, police officers and those in the military to have their student loans forgiven if they worked in those jobs for 10 years and satisfied other criteria. The suit alleges that Navient took advantage of the complexity of the program to discourage borrowers from filling out the paperwork and encouraged them into forbearance programs where their interest payments continued to accrue.
The first cohort of borrowers to have made 120 payments are now eligible for the loan forgiveness, but few are finding themselves accepted. A recent U.S. Department of Education report showed that only 96 of 28,000 borrowers who applied were green-lighted.
Lawyers for the teachers say that Navient representatives are told to spend under seven minutes on each phone call with a borrower, which puts pressure on them to deal with a question quickly rather than thoroughly. In addition, the company doesn’t have a financial incentive to help people into the program, the suit said.
According to Lena Konanova, an attorney for the firm of Selendy & Gay PLLC, the suit poses the question of how much Navient has benefited on the backs of public service employees.