Why The Navient Lawsuit is Big News for Student Loans

A lawsuit has been filed against Navient, one of the largest student loan services in the United States and if you have student loans, there is a good chance that you are being serviced by this corporation. Navient is a spinoff company from Sallie Mae and it services over $300 billion in private and government student loans with over 12 million customers. The lawsuit was filed by members of the American Federation of teachers, which is the nation’s second-largest teachers union. Here is how the lawsuit can affect your student loans.

Allegations of the lawsuit

There are a few significant allegations of the lawsuit. The first is that Navient had developed a system for misdirecting borrowers towards student loan repayment programs and forbearances which would not allow them to qualify for the Public Service Loan Forgiveness program. This program allows borrowers who serve in the public sector to have portions of their student loans forgiven after they meet a set of requirements for eligibility.
The next significant factor is the allegation that Navigation violated their government contract and ignored the best interests of the borrowers by preventing students from entering into Fedloan for access to the Student Loan Forgiveness program. They did this so they could continue to accrue fees from student loans. This resulted in otherwise qualified individuals for the program paying millions more in student loans than they would have needed to if they had been granted access to the Forgiveness program.

The bottom line

Navient intentionally kept borrowers who were qualified for loan forgiveness programs trapped under a pile of student debt by failing to give them accurate information about their options. Borrowers who work over 30 hours per week in an eligible federal, state or public service job or in a 501c3 non-profit job who make 120 eligible on-time payments may qualify for the loan forgiveness program. The lawsuit was filed in the U.S. District Court n the Southern District of New York. When asked about the lawsuit, Navient declined to give their opinions or comment.

Multiple lawsuits against Navient

This isn’t just happening in New York State. Navient has actually been sued in a total of five other states including Mississippi, Washington, Pennsylvania, Illinois and California for taking improper actions on behalf of the student loan borrowers they service.

Navient has been sued by five states, including California, Illinois, Pennsylvania, Washington, and Mississippi, who have alleged improper actions on behalf of student loan borrowers. They have further been accused of creating obstacles to repayment by giving students inaccurate information, incorrectly processing their payments, failing to respond to borrower complaints and cheating struggling students out of lower payments which they were eligible for which is an illegal act. They’ve also been accused of deceiving private student loan borrowers about the requirements to release their co-signer from their loans as well as harming the credit of borrowers who are disabled and this includes veterans with severe injuries.

When it comes to your student loans, it’s totally up to you to ensure that you are treated fairly and legally. This means that you need to take steps to protect your rights.

1. Become aware of your student loan options

Your student loan servicer has the responsibility to help you understand which options are available to you as a borrower. This includes refinancing of student loans, federal student loan consolidation, income-driven repayment plan, and student loan forgiveness programs. Since Navient has fallen down on all counts, it’s up to you to do the research and find out for yourself.

2. Keep track of recent student loan developments

In the coming years, there may be many changes to your loans. The public service loan forgiveness program could come to an end and there may be changes to your student loan repayment program so keep on top of the news as it relates to your student loans and make sure that the information is provided from reliable sources.

3. Keep detailed records

It’s important that you maintain an organized file with records of all student loan payments you’ve made. Also, keep all correspondence with your student loan servicer in this file. It’s a better option to correspond in writing so you will have hard copies of your interactions with them.

4. Don’t hesitate to file a complaint

If there is any discrepancy in the service that you receive from your student loan servicer, contact the Consumer Financial Protection Bureau of the U.S. Department of Education. There are free student loan calculators available to help you learn what your repayment options are for your student loans and there are some simple steps that you can take to pay the loans quicker.


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