Navient Lawsuit Unveils Private Student Loan Borrowers Lied To
Navient, formerly known as Sallie Mae Inc. is being sued for not releasing co-signers on private student loans. The company provides service to over 12 million student loan borrowers in the United States and includes over 6 million people under a contract held with the U.S. Department of Education for a total of over $300 billion in private and federal student loans.
Navient’s primary responsibilities as a loan service include providing assistance to borrowers to educate them on enrollment and maintenance of alternative payment plans, communicating with student loan customers regarding their loan repayments and options, and the managing of student loan accounts including maintenance of monthly payments.
Unfortunately, according to the lawsuit, those dealing with the company experienced severe service failures that went well beyond enrollment and renewal of affordable payment plans. As a result, financially vulnerable students were unable to secure the benefits of plans which were intended to prevent the burden of student debt at unaffordable levels. In addition to not providing these key services, Navient also relayed erroneous information to consumer reporting agencies for thousands of its permanently and totally disabled individuals and veterans. This was accomplished by misrepresentation of loan discharge due to disability as loan default by its disabled borrowers to consumer reporting agencies, damaging their credit rating
Further to these actions, Navient and its subsidiaries delayed or denied access to another loan features by withholding information regarding loan criteria which would discharge borrowers’ co-signers from their obligation. This feature, common on many private student loans which require a co-signer, relieves the co-signer from the agreement provided the borrower has met specific criteria, such as making a predetermined number of payments consecutively. Instead, Navient encouraged students to make early payments or extra payments in advance in order to skip a payment later, causing the consecutive counter to reset to zero. Anyone who paid in advance and took Navient up on their offer to skip a payment was inadvertently tying their co-signer into their obligations for an extended and unnecessary period.
In addition, Navient repeatedly processed private and federal student loan payments made by borrowers incorrectly over their various accounts for months, and resulted in extra charges or for portions of loans to fall into default status. When borrowers noticed the errors and contacted the company, they continued to misapply payments to the borrowers’ loan accounts for many months, further damaging the student loan borrowers’ credit and financial stability.
As a result, since July 2011, tens of thousands of borrowers and co-signers have filed complaints with Navient , the Consumer Financial Protection Bureau, and other regulatory and government agencies due to the difficulties they have encountered in their attempts to repay their student loans or with access to loan repayment programs. These actions have placed co-signers in precarious positions and increased the overall bottom line on their credit scores in the way of overall debt for well beyond the intended duration. The lawsuit seeks to end these unlawful financial practices and find permanent relief, restitution, refunds, civil penalties, and other relief for those who have had their rights under Federal consumer law violated.