Navient Lawsuit: Who Can Take Action?

Navient, formerly known as Sallie Mae, has been involved in several lawsuits since 2017, including one filed by the Consumer Financial Protection Bureau (CFPB) and six state attorneys general. The lawsuits allege that Navient, one of the largest student loan servicers in the country, engaged in deceptive practices, misled borrowers, and improperly handled loan repayments. As a result, Navient has been banned from federal student loan servicing and ordered to pay millions in settlements. Borrowers who believe they may qualify for relief under these settlements can contact the CFPB directly by calling $(855) 411-2372 or visiting their website for more information. Additionally, borrowers can update their contact information with their new loan servicer to stay informed about their loan status and any potential impacts from the Navient lawsuits.

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Borrowers who may qualify for income-driven repayment plans

The Consumer Financial Protection Bureau (CFPB) sued Navient in 2017 for failing borrowers at every stage of repayment. The lawsuit alleges that Navient steered borrowers who may have qualified for income-driven repayment (IDR) plans into forbearance instead. This practice was cheaper and simpler for Navient but detrimental to borrowers.

The CFPB's lawsuit against Navient alleges that the company steered borrowers who may have qualified for income-driven repayment plans into forbearance. Income-driven repayment plans are designed to make loan repayment more affordable for borrowers by setting their monthly payments at a percentage of their discretionary income. These plans can also provide borrowers with loan forgiveness after a certain number of on-time payments.

To qualify for an income-driven repayment plan, borrowers typically need to demonstrate a partial financial hardship, which means that their student loan payments are high relative to their income. This determination is usually made by calculating the borrower's monthly payment under a standard repayment plan and comparing it to their discretionary income. If the borrower's student loan payments are deemed unaffordable, they may be eligible for an IDR plan.

It is important to note that there are different types of IDR plans, and borrowers may qualify for one type but not another. The specific plans available to borrowers depend on factors such as when they took out their loans, their income, family size, and other financial obligations. Some common examples of IDR plans include Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR). Each plan has its own unique eligibility requirements and terms, so borrowers should carefully review their options to determine which plan best suits their needs.

While Navient provided borrowers with notices about IDR plans and their renewals, the lawsuit alleges that the company still failed to properly guide borrowers towards these plans when they were eligible. Instead, Navient allegedly steered borrowers towards forbearance, which can pause loan payments temporarily but often leads to accrued interest being capitalised, increasing the overall cost of the loan.

Borrowers who believe they may have qualified for an income-driven repayment plan but were placed into forbearance by Navient can seek information and updates on the Navient settlement by visiting www.NavientAGSettlement.com or calling the settlement administrator, Rust Consulting, at 1-833-630-1416. Consumers who are eligible for private loan cancellation under the settlement do not need to take any action.

Predatory subprime private student loans

In 2017, the Consumer Financial Protection Bureau (CFPB) and six state attorneys general filed lawsuits against Navient, formerly known as Sallie Mae, for wide-ranging student lending failures. The lawsuit alleged that Navient failed borrowers at every stage of repayment, steering borrowers toward forbearance instead of income-driven repayment plans. The Massachusetts Attorney General and other state attorneys general also filed lawsuits against Navient, accusing the company and its subsidiaries of violating consumer protection laws by engaging in unfair and deceptive practices. This included originating predatory subprime private student loans.

Sallie Mae, now Navient, is a leading private lender for student loans, making loans that aren't backed by the government and selling them as securities to investors. These loans often had mandatory arbitration clauses, making it difficult for borrowers to discharge the debt through bankruptcy. While some progress has been made toward cancelling predatory private student loans from the 2000s, more needs to be done to ensure compliance with consumer protection laws and provide relief for borrowers.

If you have questions or concerns about the Navient lawsuit or predatory subprime private student loans, you can visit the CFPB's website or call (855) 411-CFPB (2372). Additionally, you can visit www.NavientAGSettlement.com or call the settlement administrator at 1-833-630-1416 for more information on the Navient settlement.

Private loan forgiveness

In 2017, the Consumer Financial Protection Bureau (CFPB) and six state attorneys general filed lawsuits against Navient, the largest student loan servicer in the United States. The lawsuit accused Navient of failing borrowers by pushing them into costly forbearances and deferments instead of affordable repayment plans, misleading them about Public Service Loan Forgiveness, and mishandling cosigner releases. As a result, Navient was banned from federal student loan servicing and ordered to pay $120 million in compensation.

Following years of scrutiny and legal pressure, Navient introduced a private loan forgiveness program in 2024. Officially known as the "school misconduct discharge application," the program provides relief for borrowers with high-interest loans from predatory for-profit schools. Borrowers who have unpaid loans (originally from Navient or Sallie Mae) used to attend a for-profit school known for fraudulent or misleading practices may be eligible for loan forgiveness. It is important to note that this program is separate from Navient's previous lawsuits and settlements.

To apply for Navient's private loan forgiveness, borrowers must request the "school misconduct discharge application" from Navient and proactively pursue relief. Strong documentation of personal harm caused by the school's misconduct is critical to the application. It is worth noting that denials are common, but borrowers can resubmit strengthened applications or explore other options if initially rejected.

While private student loan forgiveness is rare, some lenders may offer forgiveness or discharge in the event of the borrower's death or permanent disability. Additionally, borrowers with private student loans can explore other options such as deferment, forbearance, refinancing, repayment assistance, or negotiating with their lender. It is always recommended to contact the lender to discuss alternative repayment solutions and relief options before missing payments.

Student loan borrowers

Borrowers can apply for private loan forgiveness if they believe their school misled them. Additionally, borrowers with Navient student loans originated between 2003 and 2014 who fell more than seven months behind on payments can also get cancellation. Consumers who are eligible for the private loan cancellation under the settlement do not need to take any action.

The Consumer Financial Protection Bureau (CFPB) sued Navient for failing borrowers at every stage of repayment. The lawsuit alleges that Navient steered borrowers who may have qualified for income-driven repayment plans into forbearance instead. This practice was cheaper and simpler for Navient but detrimental to borrowers. The Massachusetts Attorney General and other state Attorneys General also filed lawsuits against Navient, alleging that the company and its subsidiaries violated consumer protection laws by engaging in unfair and deceptive servicing and collection practices.

Navient borrowers can visit the CFPB website or call (855) 411-CFPB (2372) for more information. They can also visit www.NavientAGSettlement.com or call the settlement administrator, Rust Consulting, at 1-833-630-1416.

Loan servicing and collection operations

Navient, formerly known as Sallie Mae, was the largest student loan servicer in the United States at the time of the CFPB lawsuit in 2017. The company serviced more than $300 billion in federal and private student loans, including over 6 million accounts under its contract with the Department of Education.

The CFPB's lawsuit against Navient alleges that the company failed borrowers at every stage of repayment. Specifically, the lawsuit claims that Navient steered borrowers toward costly repayment options that were more beneficial to the company but detrimental to the borrowers. Navient is accused of misleading borrowers about income-driven repayment plans and the benefits of enrolling in such plans. The company is also alleged to have made predatory subprime loans to students attending for-profit schools and colleges with low graduation rates, despite knowing that borrowers would be unable to repay.

In response to the allegations, Navient provided a defence, stating that it gave clear and easily understood notices to borrowers about IDR plans and their renewals. However, the CFPB's proposed order against Navient seeks to ban the company from servicing federal Direct Loans and acquiring most loans under the Federal Family Education Loan Program. The order also includes a $120 million fine for Navient's wide-ranging student lending failures.

The settlement with the Massachusetts Attorney General and other state Attorneys General requires Navient to reform its conduct and cease unfair and deceptive practices in servicing and collecting student loans. The settlement includes terms aimed at improving Navient's servicing and debt collection operations and ensuring better treatment of federal loan borrowers.

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