I’ve got great news! As the Government has finally seen the light, and begun to tighten it’s grip on the student loan industry, it appears that they’re finally setting their targets on some of the right players.
Recently, we’ve seen Government-initiated student loan relief programs created for a series of For-Profit schools, including DeVry, Corinthian Colleges, and ITT Tech, but there’s never been a large-scale case against a student loan debt servicer… until now..,
Do you owe money to Navient, or did you already pay off your loan from Navient (or Sallie Mae?). Read this post to find out how much money you may be able to get, and when it should arrive.
Are Navient Student Loans Being Forgiven?
There’s no official announcement quite yet that the outstanding Navient (Sallie Mae) debt will be forgiven, or that anyone who’s already paid off all or a portion of their loans will be eligible for a refund, but my gut tells me that this is forthcoming, and that we should all be celebrating this massive development.
And while I was a little fast and loose with the wording of this page’s Title, I do think there will soon be a Navient Student Loan Forgiveness Program, or two programs for that matter, with one offering Forgiveness for Federal Student Loans, and the other providing Student Loan Forgiveness for Private Loans.
This may just be the biggest development in Student Loan history, or at least, it’s the biggest potential development since I began tracking this channel closely in 2006, and I’m extremely happy to relate the good news to all of you, because for those of you with loans tied to Navient or Sallie Mae, I think you’re going to be getting a ton of money back…
The CFPB is Suing Navient (Formerly Sallie Mae)
The Consumer Financial Protection Bureau just announced a series of new lawsuits filed against Navient (which used to be called Sallie Mae) accusing the nation’s largest student loan debt servicer for “Failing Borrowers at Every Stage of Repayment”.
What’s this mean for you? It means there’s a damn good chance that anyone who’s had their student loan debt serviced by either Sallie Mae or Navient has a shot at earning student loan forgiveness, or at least at getting a partial refund.
What is Navient Accused Of?
In one lawsuit, the CFPB states that Navient conducted illegal behavior by cheating “borrowers out of repayment rights through shortcuts and deception”, which, in my opinion, is a HUGE deal!
If you’ve been paying attention to student loan debt laws in recent years, then you’ll be well aware of the ever popular “Defense Against Repayment” provision, which allows borrowers to apply for a complete debt discharge in return for proving that the school they attended did something illegal to encourage them in taking out loans.
More specifics have recently emerged and it looks like Navient’s biggest crime was taking shortcuts when handling situations for their borrowers, failing to operate in the borrower’s best interest (by getting people enrolled in the Income-Based Repayment Programs that offer loan forgiveness after a set period of time, and instead, pushing people to sign up for Forbearance and Deferment benefits, which take less time to set up, but create a future debt-bomb.
And not only was Navient doing this, but they were doing it strategically, because they’re claiming they aren’t being paid enough to offer the service that’s in the best interests of their borrowers, as it’s more time consuming than the simple solution (which traps people to never-ending debt cycles!).
I can’t see any reason why this behavior wouldn’t qualify borrowers for a Defense Against Repayment Discharge, so if you’ve had any similar activity from Navient, where they advised you to do something AGAINST YOUR BEST INTERESTS, then I would highly advise you get right on drafting your Defense Against Repayment letter, and pushing for loan foriveness.
In my opinion, basically anyone who’s been assigned Navient/Sallie Mae as their loan servicer will be able to easily qualify for the Defense Against Repayment benefit program.
Will This Cover Federal And Private Loans?
Yes, and that’s perhaps the best part about this whole deal; both Federal Student Loans and even Private Student Loans are impacted by this lawsuit, as Navient is the largest servicer in the country (on the planet?) for student loan debt, and operates in both spaces.
The specific complaint from the CFPB accuses Navient of “creat[ing] obstacles to repayment by providing bad information, processing payments incorrectly, and failing to act when borrowers complained”.
As I’ve said for years… always contact your loan servicer first when you have questions about your loans, but don’t give up just because they told you No! That’s where sites like mine, consumer protection groups like the CFPB, attorneys and other consumer advocates can enter the fray and literally save your day, as we have nothing to gain by preventing you from acquiring the benefits you’ve earned!
Navient is further accused of having “illegally cheat[ing] many struggling borrowers out of their rights to lower repayments, which caused them to pay much more than they had to for their loans”, and again… can you believe it? Literally, the largest servicer in the world, and they were literally acting like movie villains? How could anyone at Navient have thought they’d get away with something like this… don’t ask me…
On the bright side, the CFPB isn’t just attacking Navient for the sake of ruining their business, but has also clearly indicated that they seek to “recover significant relief for the borrowers harmed by these illegal servicing failures”. What’s that mean? It means if you got screwed by Navient/Sallie Mae, you’ve probably got some money coming your way soon.
New Developments in the Case
A new story from Bloomberg has shed additional light on the contentious relationship between Navient and the CFPB, and it looks like Navient is attempting to weasel it’s way out of owning up to the abuses they’ve carried out.
Navient is attempting to escape from any liability for failing to help loan borrowers pay back their loans as quickly as possible, saying that their job is not to help debtors, but to collect money for the U.S. Department of Education.
And while this is technically true, it’s turning into a public relations disaster for Navient, especially since the CFPB has been accusing them of all sorts of additional offenses, and more details are emerging about the specifics of their systematic abuse.
In my opinion, it’s not even what they’ve done that makes me the most upset, but it’s the attitude with which they’re treating the situation, attempting to dismiss it entirely and walk away scott-free. With arguments like “We’re not being paid enough for that”, “Doing the right thing takes too much time”, or “We’re just here to collect”, I don’t know how the Federal Government could possibly allow them to continue operating as their largest debt servicer.
And, in fact, that’s what many prominent Student Loan Debt experts are now calling for! Hopefully, these experts will be listened to and Navient will get it’s comeuppance, being sued, forced to write down the debt of hundreds of thousands to millions of Americans, and then put out of business by getting fired by the Federal Government.
In my opinion, Navient deserves no quarter here.
Background on Navient
Not only was Navient the most well-known student loan servicer, but they were also quite literally the largest, with over 12 million borrowers and more than 6 million borrowers of Federal Student Loans, and total outstanding loans of over $300 billion dollars (combined Federal and Private debt).
Navient was supposed to operate like a simple bank, loaning out money, then collecting it (while following US laws), but apparently that all went out the window in 2009, just after President Obama’s Student Loan Forgiveness Program was officially launched.
While President Obama’s program was supposed to offer student loan relief for all borrowers, in a variety of ways, Navient apparently decided to go their own route, and in some cases totally disregard changes made to student loan laws, while in others, simply misleading their borrowers about whether or not they were eligible for specific benefits.
CFPB alleges that the income-driven repayment plans and their many benefits (such as tax and interest deferments) were being actively suppressed by Navient, even for those borrowers who qualified to receive the benefit.
Even borrowers who should have qualified with things like Economic Hardship Deferments, $0 monthly loan payments and other significant money-saving solutions were actively denied the right to leverage them, and forced to repay back far more debt than they actually owed.
Fortunately, CFPB has finally gathered enough evidence of Navient’s systematic disregard for current student loan laws, and is now acting on our behalf to try and protect the rest of the borrowers with outstanding Navient debt.
Not only is Navient accused of providing “bad information” over the phone, but they’ve also been said to have sent out improper information in writing, incorrectly (and it sounds like purposefully..) processed payments, and made it harder for borrowers to qualify to pay for any of the excellent Income-Driven Student Loan Repayment plans.
And not only did these practices make things harder for borrowers, but they are also highly illegal, and likely to land Navient in some serious hot water. I would not be surprised to see Navient split up into a million tiny splinter servicers, then sold off to the highest bidder, as it’s exceptionally rare that this company will ever again manage to earn the trust of the average American consumer.
What are the Specific Allegations of the CFPB’s Lawsuit?
The Consumer Financial Protection Bureau isn’t just moving on Navient for being hard to work with, or obstructionist in their ways, but they’re accusing the company of violating some pretty serious laws, and making some major breaches of standard business ethics, including:
- Failing to Apply Borrower Payments to Their Accounts
- Stromarming Borrowers to Pay More Than They Had To
- Hiding Details People Needed to Maintain Lower Payments
- Lying to Private Borrowers About Requirements to Release Co-Signers
- Ruining the Credit Scores of Disabled Borrowers, Including Veterans
If that list doesn’t read like something out of a Soap Opera, then I don’t know my butt from a hole in the ground…
My thinking? The Consumer Financial Protection Bureau has Navient dead to rights, and has probably been working with some high level, or at least mid-level whistleblowers who are prepared to totally rain on Navient’s parade.
Can you say… treat other people as you want to be treated? Apparently, Navient’s command staff forgot about the Golden Rule, and has been doing anything they can to spur short-term profit growth, probably to hit bonuses, increase the value of stock options, etc.
At the end of the day, it doesn’t really matter what Navient actually did, so long as they’re nailed for 1 or 2 big illegal activities, because that alone will set them up for a series of class-action lawsuits, and it’ll make it possible for anyone who’s borrowed from them to pursue their own personal Defense Against Repayment Discharge.
Why is the CFPB Going After Navient?
It’s pretty clear that the Student Loan Debt Crisis is a threat to National Security, especially considering that there is an estimated $1.4 TRILLION in outstanding student loan debt now owed, enough to make anyone think twice about building another Aircraft Carrier or Nuclear-Tipped ICBM. Perhaps there are better ways we could be spending all our hard-taxed cash?
And while student loan debt isn’t the largest debt market, it is the 2nd biggest, and one that’s extremely problematic as well, as it’s been reported that over 8 million American borrowers are currently in default on over $130 billion in outstanding loans.
What Should I Do?
Right now – nothing. There is literally nothing that you can do, yet at least, as there aren’t any forms, application documents or other details for you to fill out and submit.
However, with that said, I would absolutely start getting your documents and financial records in order, because at some point, refunds will likely be issued, and the best way to ensure that you’ll get access to your own portion of funds is going to be to get your application in early.
Like a lot of other Government-funded relief programs, I wouldn’t be surprised if the requests for approval and benefits will far outweigh the ability of the Federal, State and local governments to provide borrowers with recompense.
What’s that mean? It means you need to find out how much you’ve paid to Navient (or Sallie Mae), make a record of each payment you submitted, document (to the best of your ability) any conversations you had with them regarding Student Loan Repayment plans, and be prepared to fight the good fight, because at some point you will probably need an attorney.
Where Can I Go For More Information?
To get the words straight from the horse’s mouth, you’ll want to head on over to the official Consumer Financial Protection Bureau website, which is located at: http://www.consumerfinance.gov/, or by clicking this link to the official announcement of the CFPB lawsuit.
As News Emerges…
Whenever more details about this lawsuit, the eventual settlement (I’m sure they’ll reach one), and the actual benefits getting sent back to consumers are announced, I will be sure to update this page. For your part, if you spot anything that I haven’t yet covered which is mentioned elsewhere (on any media source, including websites and forums), then please let me know what I’ve missed.
I would like to keep this page fully updated, as useful and helpful as possible, and hopefully, it’ll help me accomplish my original objective for creating this website (getting people OUT of student loans!).
If you have other questions that haven’t already been answered here, please feel free to post them in the Comments section below.
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