What student loan borrowers need to know about the Navient lawsuits

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Navient is one of the largest student loan servicers in the country, with millions of borrowers using it to repay their federal and private student loans. However, a few lawsuits allege harmful and deceptive practices, which could impact your student loans.

Whether Navient is your lender or not, here’s what these lawsuits mean for your student loans.

What are the Navient lawsuits?

There are a handful of Navient lawsuits going on right now in a few different states, starting as early as 2017. Here’s what they’re alleging.

Misleading borrowers

The Consumer Financial Protection Bureau says that Navient “illegally fail[ed] borrowers at every stage of repayment.” The lawsuit, brought on by the CFPB, alleges that Navient hurt borrowers by providing bad and sometimes false information, not processing payments correctly and not taking appropriate steps to rectify situations when borrowers brought up these complaints.

In fact, the lawsuit alleges that Navient purposely made many borrowers pay more on their loans than they needed to, and the CFPB is suing for borrowers to get financial relief from Navient’s mishandling.

The suit alleges that Navient steered borrowers into forbearance over other options, like income-driven repayment plans. Forbearance temporarily pauses student loan payments without hurting your repayment standing, but interest still builds while you’re not making payments. That means borrowers ended up paying more in interest because they went through with forbearance rather than saving money and choosing an IDR plan.

Advising expensive options

A New Jersey lawsuit filed in October 2020 alleges that Navient pushed borrowers into taking out private student loans with co-signers — even if it wasn’t in the best interest of the borrower. New Jersey says that Navient told borrowers they could have family members guarantee their private student loans as co-signers, but then set nearly impossible hurdles to let borrowers release their co-signers from the loan.

This means that Navient gets paid if the borrower defaults, since Navient can collect by charging the co-signer on the loan.

Overcollection and loan lies

If borrowers were behind on their loans, New Jersey says that Navient would tell borrowers that they owed more than they really did. According to New Jersey, Navient did this by collecting not only the amount that was past due, but also the next month’s amount. This caused borrowers to overpay — sometimes hundreds of dollars — often when they couldn’t afford it.

The CFPB alleges that Navient also didn’t allow some borrowers to discharge their loans when they qualified for it.

“Severely and permanently disabled borrowers with federal student loans, including veterans whose disability is connected to their military service, have a right to seek loan forgiveness under the federal Total and Permanent Disability discharge program,” CFPB says. “Navient misreported to the credit reporting companies that borrowers who had their loans discharged under this program had defaulted on their loans when they had not.”

How does the Navient lawsuit affect my student loans?

The majority of these lawsuits are ongoing, which means that your student loans won’t see much — if any — impact. But if you’re experiencing any issues with your student loan servicer, you can take a few steps to ensure that it’s working in your best interest.

Review your loan details. Whether you’re on autopay or you haven’t been able to afford to make payments in awhile, you might not know what you’re on the hook for or even what types of loans you have. Since Navient services private and federal student loan lenders, check what you have before exploring your options.
Explore alternatives on your own. You can look into different repayment options, like income-driven repayment plans, forgiveness or student loan refinancing. It’s important to know your options before talking to your loan servicer so you’re informed about different offers.
Ask your servicer for options. Even if you’ve done all the research on your own, contacting your loan servicer is next. Ask it what you qualify for and how each option impacts repayment and what you’ll eventually repay over the life of your loan. If your lender mentions that you don’t qualify for specific programs — or only directs you into more expensive payment options — it may be a red flag.
If necessary, file a complaint. If you think your loan servicer is causing you to pay more money than you think you owe or is otherwise misleading you, consider filing a formal complaint. You can do this with your lender, with your state’s attorney general or at the federal level: the U.S. Department of Education, Federal Trade Commission or CFPB. If you’re going to go this route, you’ll need documentation proving your case. Keep detailed notes and records of every phone call and correspondence with your lender.
Does Navient service my student loans?

While Navient services millions of borrowers, it doesn’t service every borrower. It also services both federal and private student loans.

You can check your servicer with the Department of Education if you have federal loans. The best way to see who services your private loans is to check your latest correspondence regarding your student loans. If you haven’t made payments in a while, you might want to check your credit report. You can do this for free through AnnualCreditReport.com. This lets you see all your debt, including the ones that are delinquent, in default or paid off.

Will Navient forgive student loan payments?

One Navient lawsuit was settled in July 2020; however, no monetary damages will be given to borrowers affected. Instead, Navient will implement improved training for employees regarding PSLF.

It’s possible that future lawsuits could provide affected borrowers monetary compensation, but at this time it’s unlikely that Navient will forgive student loan payments.

The bottom line

With half a dozen different lawsuits still working their way through the court system, Navient is facing a slew of legal battles over how it handles student loans. With many accusing the servicer of misleading borrowers, charging more than what was due and lying to borrowers about their loans, there’s a chance that current borrowers could see an impact.

If Navient is your student loan servicer, you probably won’t see any cash from these lawsuits anytime soon. But you can take control of your student loans by making sure you’re on the best repayment plan for your budget.

Learn more:
Big changes are coming to federal student loan servicing
Student loans getting transferred to a new servicer? Here’s what you need to know
How to qualify for student loan forgiveness programs

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