How This New Navient Lawsuit Affects Your Student Loans


Members of the American Federation of Teachers, the second-largest teachers’ union in the United States, have filed a lawsuit against Navient, one of the nation’s largest student loan managers.

If you have a student loan, chances are it’s managed by Navient. Navient, spun off from Sallie Mae, has more than 12 million customers and manages more than $300 billion in government and private student loans.

Here’s what you need to know and steps you can take.

Navient trial: the allegations

The lawsuit alleges that Navient systematically misdirected borrowers into student loan repayment programs and forbearance types, which are ineligible for public service loan forgiveness, which allows public servants to have their loans canceled. federal student loans after meeting certain requirements.

The lawsuit also alleges that Navient ignored the best interests of borrowers — in violation of its government contract — to prevent borrowers from switching to FedLoan (the student loan servicer that administers the public service loan forgiveness program), in order to that Navient can continue to collect fees.

As a result, plaintiffs say teachers, nurses, first responders, social workers and other public servants are paying millions of dollars more than they otherwise should in student loan repayments.

“Navient has deliberately and systematically trapped teachers, nurses and other public service workers under a mountain of student debt instead of providing them with accurate information about their loan options,” said Randi Weingarten, president of the American Federation of Teachers.

The Public Service Loan Forgiveness Program is a federal program that forgives federal student loans for borrowers, including teachers, who are employed full-time (more than 30 hours per week) in federal public service employment , state or local qualifying or 501(c)(3) nonprofit employment that makes 120 qualifying one-time payments.

Navient declined to comment on the lawsuit, which was filed in U.S. District Court for the Southern District of New York.

Navient has been sued by five states, including California, Illinois, Pennsylvania, Washington and Mississippi, which have alleged improper actions on behalf of student borrowers.

This follows action by the Consumer Financial Protection Bureau (CFPB), which sued Navient in January 2017 for allegedly “systematically and unlawfully [failing] borrowers at each stage of repayment”, including:

  • created obstacles to reimbursement by providing incorrect information;
  • process payments incorrectly;
  • failed to act when borrowers complained;
  • illegally deprived many struggling borrowers of their rights to lower payments, causing them to overpay their student loans;
  • misled private student borrowers about the requirements to release their co-signer from the loan; and
  • hurt the credit of disabled borrowers, including seriously injured veterans

Action plan: 5 steps

When it comes to your student loans, the ball is in your court:

1. Know your student loan options

One of the roles of your student loan manager is to help you understand the options available to you regarding your student loans, including:

When it comes to student loan repayment, it’s best to conduct your own independent research rather than relying on your student loan officer to give you all the answers.

2. Monitor the latest developments in student loans

Several changes could be made to your student loans in the years to come. This may include changes to student loan repayment and student loan forgiveness, among others, including the potential end of public service loan forgiveness.

3. Keep records

Keep an organized record of all your student loan payments, including any correspondence with your student loan officer. It is best to communicate in writing with your student loan officer.

4. File a complaint

If you believe you have been wronged by your lender or student loan officer, you can make your voice heard by sending a formal complaint to:

5. Pay off your student loans faster in 2018

One of the best ways to avoid dealing with student loan servicers is to not have one.

These free student loan calculators can help you understand your student loan repayment options.

You can also follow these simple steps to pay off your student loans faster.

Previous Europe begins to position itself as a direct lender competitor of the United States
Next Kitces on what advisers need to know about new PPP loans and the stimulus bill