Student loan borrowers should be aware of the Navient lawsuit

Review your credit report, file complaints if necessary, and learn about repayment options.

There are six lawsuits against Navient Corp. because the company is a major servicer of both private and federal student loans. There is no telling how long the litigation will take to resolve.

By the end of December 2021, Navient is slated to end its federal student loan servicing contract.

Below are answers to some common questions borrowers have:

Navient has filed a lawsuit. What is it about?

Navient was sued in January 2017 by the U.S. Consumer Financial Protection Bureau, the Illinois attorney general and the Washington attorney general. A lawsuit was filed in October 2017 by the Pennsylvania attorney general. A lawsuit was filed by the California attorney general in June and the Mississippi attorney general in July 2018.

CFPB contends, among other things, that Navient has:

  • Payments that have been misallocated
  • Provided multiple forbearance plans instead of income-driven repayment plans to struggling borrowers, and
  • The information provided about reenrolling in income-driven repayment plans and qualifying for a co-signer release was unclear.

Servicers of student loans: What they do and what they are

According to the agency, Navient settlement harmed borrowers and should compensate them. An October 2017 fact sheet states that Navient believes the CFPB’s claims are “unfounded,” and that the suits are based on new servicing standards that are being implemented retroactively.

Navient’s future practices: what are they?

Navient said it will “improve” its call center practices to target and provide information to federal student loan borrowers who may be eligible for Public Service Loan Forgiveness relief.

An agreement with the American Federation of Teachers was reached in June 2020, and these new measures are part of that agreement. The union claimed Navient’s practices led to public service workers being denied loan forgiveness or not being offered the best repayment plan.

A June 19, 2020 news release states that the settlement also includes a $1.75 million contribution to a nonprofit organization that will provide education and student loan counseling to public service workers.

Navient’s customer service representatives will be trained to recognize words or phrases that suggest PSLF or another type of loan repayment plan might be appropriate.

In a release, Randi Weingarten, president of the American Federation of Teachers, said the agreement shows how borrowers and servicers can work together. This statement recognizes that PSLF is an essential program for many graduates who forego larger salaries in the corporate sector in order to devote themselves to public service.

In order to comply with these new practices, Navient must self-report, but it’s not clear to whom.

Can Navient student loans be forgiven?

It’s unlikely Navient borrowers will be compensated anytime soon under the CFPB’s “Navient student loan forgiveness” program.

A borrower’s defense to repayment can lead to loan forgiveness

Navigent borrowers with federal student loans may qualify for a loan forgiveness program such as Public Service Loan Forgiveness or a repayment plan based on income. It takes time and diligence for forgiveness to occur through these programs. To qualify for PSLF, for instance, you have to make on-time payments for at least 10 years.

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