Can You Use the Navient Student Loan Lawsuit to Receive Loan Forgiveness?
UPDATED Sunday March 29th, 2020
I created this Guide to explain the Navient Student Loan Lawsuits and to teach you how to use them (or other programs) to receive Navient Student Loan Forgiveness Benefits.
First, I’ll explain the major lawsuits filed against Navient, then I’ll go through an explanation of how this fits into the wider Student Loan Debt Crisis, and give you advice on how to deal with your loans.
If you’d like to skip to the part about getting assistance with your debt, then simply click one of the links below to be taken to that section of the Guide:
- 2020’s Best Student Loan Forgiveness Programs
- 2020’s Best Student Loan Discharge Programs
- Other Federal Student Loan Assistance Programs
- Other Private Student Loan Assistance Programs
With that said, let’s get into the Navient Lawsuits.
Quick Answers to Common Questions About the Navient Lawsuits
All six of the major lawsuits filed against Navient are still underway, and there’s no sign that any of them will be resolved anytime soon, so it’s important to note a couple things about them right off the bat:
- No, you will not be able to join in any of these lawsuits against Navient
- No, you’re probably not going to receive complete loan forgiveness even if Navient loses the lawsuits
- Yes, you might receive some kind of financial benefit if Navient loses, but that could be years from now, and even then, it probably won’t cover the costs of your loans
- Yes, you’ll still need to keep making your monthly payments to Navient for as long as these lawsuits remain pending
- Yes, it IS possible to get rid of your student loans, but NOT via a “Navient Student Loan Forgiveness Program”
With that said, let’s cover some additional details about the Navient lawsuits to make sure that you fully understand just what is going on with them.
But Before I Dive Into Details…
Let me first give you a piece of advice – the best way to get rid of your student loans quickly and affordably is to pay for an expert’s assistance.If you're truly struggling with student debt, then you should also consider paying a Student Loan Debt Relief Agency for help. Why? Because the people working at these companies deal with student loans all day, every day, and they're your best chance at figuring out how to get your loans back under control.
I've interviewed all sorts of debt relief agencies over the past 10 years, talking to all sorts of so-called "experts", and I can tell you that in all honesty I've only found two companies I trust to offer actual financial relief to people struggling with student loans.
For help with FEDERAL Student Loans: Call the Student Loan Relief Helpline at 1-888-906-3065. They will review your case, evaluate your options for switching repayment plans, consolidating your loans, or pursuing forgiveness benefits, then set you up to get rid of the debt as quickly as possible.
For help with PRIVATE Student Loans: Call McCarthy Law PLC at 1-877-317-0455. They will negotiate with your lender to settle your private loans for much less than you owe, then get you a new loan for the much lower, settled amount. NOTE: McCarthy Law can ONLY help with Private student loans.
If you do decide to call one of these companies and you have a bad experience with either of them, PLEASE make sure to come back and let me know about it in the Comments!
Who is Suing Navient?
Navient is being sued by several different organizations and entities, as well as a whole host of individual borrowers.
But the major lawsuits against Navient are being driven by the Consumer Financial Protection Bureau (CFPB) and the Attorney Generals of Illinois, Washington, Pennsylvania, California and Mississippi.
These are the lawsuits getting the most attention from the media, because they’re initiated by huge legal advocacy type organizations with major powers and pull.
If Navient were to experience a significant blow to their earnings and ability to continue operating as one of the country’s largest Student Loan Servicing Companies, then it’d come from one of these lawsuits.
Why is Navient Being Sued?
Navient is facing several massive lawsuits brought against them by the Consumer Financial Protection Bureau and the Attorneys General in Illinois, Washington, Pennsylvania, California and Mississippi.
In these lawsuits, Navient has been accused of grossly mishandling their Federal student loan servicing and processing duties by doing some wildly illegal things, including:
- Mishandling payments by applying them against borrowers’ best interests (like using them to pay down interest, rather than principal balances of loans)
- Suggesting that struggling borrowers use forebearances to pause monthly payments (which racks up tons of additional debt) instead of better options, like getting on an Income-Driven Repayment Plan
- Intentionally making it difficult for borrowers to understand, apply for and receive an approval for a co-signer release
- Purposefully obscuring the process for re-enrolling and completing annual certifications to remain on Income-Driven Federal Student Loan Repayment Plans
These are serious charges because they basically amount to fraud, threatening Navient’s continued contract for handling Federal Student Loan servicing duties.
But what’s most important here is that the Consumer Financial Protection Bureau has asked the Federal Courts to force Navient to offer compensation to borrowers who were affected by their shady business practices, which means that you could end up getting money back if the Courts rule against Navient.
Like I’ve said though, even if Navient does lose, it’s likely that you won’t get much money back anyway, so don’t put all your hopes on these lawsuit settlements solving your student loan debt problem.
When Will the Lawsuits Be Resolved?
That’s impossible to answer, because the lawsuits are likely to drag on for several more years.
Some of these have already been running for several years, and none of them show any signs of being resolved anytime soon.
Why? Because Navient keeps delaying the cases so they can keep borrowers (like you!) on the hook to continue making payments.
The longer the cases run, the more money Navient takes in.
How Can I Join the Navient Lawsuits?
This is one of the most popular questions I receive on this site; everyone wants to know how they can join the Navient lawsuit, but the truth is that it isn’t possible to do that.
You don’t really have to worry about it though, because if you’re a Navient borrower then the Consumer Financial Protection Bureau lawsuit against Navient will cover you.
And if you live in any of the states where Attorneys General are suing Navient, then those lawsuits will cover you as well.
Basically, anyone who owes money to Navient is ALREADY part of these lawsuits.
Will I Get Loan Forgiveness if Navient Loses?
If Navient loses the lawsuits, then it’s possible you’ll be offered some forgiveness benefits.
However, please don’t get too excited about the prospect of having your loans forgiven, or of receiving a large refund.
In other similar cases that were resolved over the past couple of years, including lawsuits against schools and other servicing companies, the settlements may have been massive, but individual borrowers typically don’t receive much.
As an example, there was a big lawsuit settlement against DeVry that included hundreds of millions of dollars in refunds, but most borrowers only received a couple hundred dollars.
If you need help with your student loans, waiting for these lawsuits to get resolved is NOT the best approach.
Then Why Do the Navient Lawsuits Matter at All?
They’re important because they signal that things could be changing, in that the servicing companies may not always be untouchable.
For decades, the schools and servicers have gotten away with murder, loading up borrowers with debt, then screwing them over and making it as difficult as possible to get rid of that debt.
But thanks to these sorts of lawsuits, servicing companies and schools are going to have to think twice about trying to take advantage of future borrowers.
Just the fact that the media is covering these stories is a big win, as it’s shedding light on the enormous problem that is the Student Loan Debt Crisis.
Links to Specific Sections Within This Guide
To help you quickly navigate to the information you need, here’s an outline of the topics that this Guide covers:
- What Caused the Student Loan Debt Crisis?
- What Was Navient’s Role In The Process?
- Who is Suing Navient?
- The Consumer Financial Protection Bureau’s Lawsuit Against Navient
- What are the Specific Allegations of the CFPB’s Lawsuit?
- Does the CFPB Lawsuit Cover Both Federal and Private Loans?
- The Illinois State Attorney General’s Lawsuit Against Navient
- The Washington State Attorney General’s Lawsuit Against Navient
- The Pennsylvania State Attorney General’s Lawsuit Against Navient
- The California State Attorney General’s Lawsuit Against Navient
- The Mississippi State Attorney General’s Lawsuit Against NavientK/a>
- New Developments in the Lawsuits
- Will All Navient Loans Be Forgiven? Will All Borrowers Receive Refunds?
- Navient’s Friends in High Places
- President Trump’s Plan for Reforming Student Loans
- Navient Is Not Your Friend
- Should I File a BDAR Discharge Complaint?
- How to File a Successful BDAR Application
- 2019’s Best Student Loan Forgiveness Programs
- 2019’s Best Student Loan Discharge Programs
- Loan Forgiveness & Taxable Income Laws
What Caused the Student Loan Debt Crisis in the First Place?
The Student Loan Debt Crisis is the direct result of legal changes that began way back in the 1970’s, when Congress began changing laws to favor student loan lenders over student loan borrowers.
Student loan experts aren’t surprised by the current crisis, because they’ve been warning that these legal changes would lead to certain disaster all along.
There are three specific pieces of legislation that spelled certain doom for ordinary Americans buried by student loan debt, including:
- The 1978 Bankruptcy Reform Act – This act was passed to prevent students from being able to file bankruptcy on their student loans within the first years of graduating from school. Passing this law turned student loans into a well-protected product that allowed lenders to be far more lenient about who they gave money to, including people who previously seemed to risky to lend to, because the law protected them from having those borrowers default quickly, and avoid paying back any of the money that they had borrowed.
- The 1990 Update to the Bankruptcy Reform Act – This change to the previous Bankruptcy Reform Act extended the time period banning Federal Student Loan Bankruptcy Discharges from 5 years post-graduation to 7 years post-graduation, making borrowers suffer through two additional years of repayment before they were able to attempt to discharge their debt via bankruptcy proceedings. Once again, it helped the student loan lenders and servicing companies at the expense of ordinary Americans.
- The 1998 Higher Education Amendments – President Bill Clinton modified Federal student loan bankruptcy laws once more to extend the no-bankruptcy discharge period indefinitely, meaning that loans could never be discharge via Bankruptcy no longer how long the borrower had been struggling with them, unless they could prove that they were facing an “Undue Hardship” because of the debt, which requires claiming that the loans are literally threatening their ability to cover essential costs (like Food, Housing, Healthcare, etc.) .
The stated purpose for passing these laws was to make it easier for poor people and people with credit problems to borrow money to go to school, which legislators claimed would help them improve their lives since they could now afford to get that college degree, which was supposedly the door to a great job, high income, and the American Dream.
Unlike mortgage loans, car loans and other types of large loans, student loans have never required any collateral, so prior to these changes, lenders were hesitant to give money to people they thought were credit risks, but now that borrowers had no way to wipe out their debt, lenders went hog-wild, approving anyone with a pulse for massive student loans.
Colleges realized that it was so easy for people to borrow huge amounts of money that they could start raising tuition rates as much as they wanted each year, fully understanding that it didn’t even matter how much they charged since everyone had access to essentially unlimited amounts of money via easy student loans.
How Did Navient Make the Student Loan Debt Crisis Worse?
Navient, (“Sallie Mae” at the time) played a major role in exacerbating the student loan crisis after realizing that they could guarantee repayment for their loans by serving as the lender, loan servicer and debt collection agency for any loans that went into default.
By having their hands in all three cookie jars (representing the entire life cycle of a student loan), they were literally certain to make more money off each loan, and especially on the loans that went into default, where they were able to charge much higher interest rates, called “reasonable fees”, ranging between 16-25%, compared to the 5-7% or so they could get from loans still in repayment.
This incentivized Navient to issue loans to riskier borrowers, since the company would stand to make even more money on any loan that went into collection.
As a result, anybody and everybody who wanted one was able to take out a massive loan, no matter how bad their credit looked, and pretty much everybody did, which is how Navient became the servicer to more than 12 million customers and over $300,000,000,000 (that’s BILLION) in Federal and Private student loan debt.
The strategy has worked wonders for Navient’s bottom line, Navient’s executives, and their investors, as the company recently announced they had acquired $10,000,000,000 in new student loans in 2017, and reported core earnings for the year at $254,000,000.
This is something they accomplished the same year they were slammed with four major, class-action lawsuits, so just imagine how well they could have been doing had nobody been attacking them on the legal front?
Who is Suing Navient?
Fortunately, the tide is turning against Navient, as they’re current facing several massive lawsuits from the Consumer Financial Protection Bureau, and five different lawsuits from the States Attorneys General from Illinois, Washington, Pennsylvania, California and Mississippi.
Each of these lawsuits accuse Navient of performing highly illegal (not to mention immoral) business practices, with all sorts of allegations in the mix, but basically boiling down to the fact that Navient has not been looking out for its borrowers, and that they’ve been purposefully making the student loan servicing and student loan repayment process as difficult, confusing and expensive as possible.
And before you start feeling bad for Navient, let’s make one thing clear: nobody likes this company!
Their poor service record has earned them a -98% rating on their Better Business Bureau page, and a 1/5 rating from Consumer Affairs.
To help you understand exactly what’s at stake here, let’s first look at each of the Navient lawsuits in detail, analyzing what they accuse the company of doing wrong, then we’ll talk about what the potential impact of these lawsuits may look like.
The Consumer Financial Protection Bureau’s Lawsuit Against Navient
The Consumer Financial Protection Bureau is leading one of the largest lawsuits filed against Navient (formerly Sallie Mae), which accuses the nation’s largest student loan debt servicer of “systematically and illegally failing borrowers at every stage of repayment.”
The important part of that statement is the “illegally” piece, because it means that anyone who’s been “illegally” treated by the servicer has a good shot at receiving student loan refunds or forgiveness benefits even if the lawsuit isn’t settled in the CFPB’s favor, IF the Department of Education starts allowing Borrower’s Defense to Repayment Discharges against Student Loan Servicing Companies.
Currently, this is not allowed under the existing rules of the system, however, so it’s basically a pipe dream for now.
What IS currently possible is using the Borrower’s Defense to Repayment Program against the school you borrowed money to attend!
Further down in this post I’ll explain exactly what Borrower’s Defense Against Repayment is, how it works, and how you can use it to try and get your loans discharged, but for now, just keep in mind that it’s a potential option if the lawsuit settlements don’t end up offering enough relief for your loans.
What are the Specific Allegations of the CFPB Lawsuit?
The Consumer Financial Protection Bureau isn’t attacking Navient for being hard to work with, or for being obstructionist in processing and handling student loans, but for violating some pretty serious laws and operating totally unethically, including doing five things that are downright disgusting:
- Failing to Apply Borrower Payments to Their Accounts
- Strong-arming 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
But that’s not all, because the CFPB has also accused Navient of taking shortcuts when handling situations for their borrowers, failing to operate in the borrower’s best interest by refusing to help people enroll in the Income-Based Repayment Programs that offer eventual Loan Forgiveness, and instead pushing them to sign up for Forbearance and Deferment programs which are faster for Navient to configure, but which cost borrowers more money over the life of their loans by racking up addition costs due to interest accumulation.
And Navient doesn’t even sound ashamed of this behavior, as their response to the allegations was that that they were doing this stuff strategically since they weren’t being paid enough to spend the required amount of time needed to provide the proper service to their borrowers.
I guess in Navient’s eyes, it was better for business to keep borrowers trapped in a never-ending cycle of debt, using those Forbearances and Deferments to accumulate interest and inflate the amount of money that borrowers owed to them, instead of getting them signed up for the proper income-based repayment plans they wanted, and which would let them discharge their loans entirely once they’d hit certain requirements.
Does The CFPB Lawsuit Cover Both Federal And Private Loans?
Yes, and that’s the best part of the CFPB’s lawsuit against Navient; this lawsuit will help everybody dealing with Navient, whether you’ve got Federal or Private debt.
The most important specific complaint from the CFPB lawsuit against Navient accuses them of “creat[ing] obstacles to repayment by providing bad information, processing payments incorrectly, and failing to act when borrowers complained”, and this applies to both their Federal and Private processing services, so unlike most other forms of loan forgiveness, those of you with Private loans are in luck here.
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”.
On the bright side, the CFPB isn’t just attacking Navient for the sake of ruining their business and smearing their good name, but they’ve literally stated that they plan on recovering “significant relief for the borrowers harmed by these illegal servicing failures”.
That means that you’ve probably still got a good chance of having some money thrown your way in the near future when the settlement is reached.
The Illinois State Attorney General’s Lawsuit Against Navient
On January 18th, 2017, Illinois Attorney General Lisa Madigan filed a lawsuit against Navient, as well as its subsidiary companies Navient Solutions Inc., Pioneer Credit Recovery Inc. and General Revenue Corporation and Sallie Mae Bank, accusing them of “mistreating student loan borrowers from start to finish – from originating student loans, to servicing those loans, to collecting on defaulted student loans.”
This wouldn’t be that big a deal if Navient didn’t have guaranteed Government contracts, subsidized by taxpayer dollars, but for a company that’s getting a free hand-out, we should hold them to a higher standard, and I personally applaud Attorney General Madigan for standing up against Navient, because you can bet that this lawsuit will put her own political career at serious risk.
Attorney General Madigan’s lawsuit seeks “relief for students who may have been impacted by the companies’ misconduct”, which means that she’s pushing for a monetary settlement that’s likely to include huge penalties from Navient, probably in the form of loan forgiveness benefits or refunds.
In her own words, the lawsuit “asks the court to provide restitution to all borrowers affected by Navient’s unlawful practices disgorge unlawfully gained profits, impose civil penalties, and rescind or reform all contracts or loan agreements between Navient and any Illinois consumers affected by the company’s unlawful practices”.
In short, Attorney General Madigan appears to be pushing for COMPLETE loan forgiveness for all Illinois residents, and if she’s successful here, then she would be setting an amazing precedent for borrowers across the country to pursue their own access to total student loan forgiveness benefits, so even if you don’t live in Illinois, you’ll want to follow this lawsuit closely.
Specific Allegations of the Illinois State Attorney General’s Lawsuit Against Navient
In her complaints against Navient, Attorney General Madigan has attacked the way the company handles all of its services across the entire student loan spectrum, from lending to servicing and debt collection procedures on defaulted loans, stating that “Navient’s practices harmed borrowers and put the company’s profits before the interests of millions of student borrowers across the country.”
The suit’s complaint states that Navient “put student borrowers into expensive subprime loans that it knew were going to fail… leadding to student borrowers needlessly carrying billions of dollars in debt”.
Those are significant claims from a very high-powered Government official with all sorts of resources to prosecute Navient, so just like the CFPB lawsuit, this is a huge deal that you should definitely be following if you owe any money to Navient.
The Illinois Lawsuit Complaints About Navient’s Lending Practices
In terms of Navient’s loan original business, Attorney General Madigan “alleges Sallie Mae began peddling risky and expensive ‘designed to fail’ subprime loans to student loan borrowers across the country [which] carried very high interest rates and fees, and, not surprisingly, were mostly given to students at the worst schools – poorly accredited for-profits”.
The lawsuit further alleges that Sallie Mae “increased its unfair and deceptive subprime lending while disregarding evidence that these loans would likely default at extraordinarily high rates”, similar to the way that the subprime mortgage lenders behaved during their role in creating the country’s mortgage crisis leading into the 2008 real estate collapse.
And that’s an important point, because as I’ve regularly attested to here on my site, the student loan debt crisis is at least as big a problem to our economy as the mortgage crisis was, especially considering that student loans have outpaced credit card debt as the single largest form of debt owned by Americans, meaning that this ticking time bomb is a serious threat not only to our economy, but also our national security.
The Illinois Lawsuit Complaints About Navient’s Servicing Processes
In terms of Navient’s loan servicing process, the lawsuit alleges that Navient “failed to perform its core duties… fail[ing]to assist borrowers… struggling with their federal student loans… steer[ing] them into successive forbearances that increased the overall cost of their loans instead of telling borrowers about federal income-based repayment plans”, and also failing to advise borrowers who did finally obtain repayment plans that they needed to provide certain information in order to remain enrolled each year, which led to “costly and unaffordable increases to their payments”.
In her own words, Attorney General Madigan states that “My investigation found that Navient failed to perform core loan servicing duties properly on both federal student loans and private loans”, which means that her lawsuit could lead to assistance for both types of borrowers, “repeatedly fail[ing] to tell borrowers about affordable repayment plans that were available to them.”
The lawsuit also accuses Navient’s servicing personnel of improperly allocating monthly payments, which is a huge deal because that led to increased penalties, fines and fees, as well as “unfairly and deceptively promoting cosigner release broadly to its borrowers when in fact very few cosigners actually qualified” for the benefit, which sounds like false advertising to me.
The Illinois Lawsuit Complaints About Navient’s Debt Collection Operations
Finally, the Illinois lawsuit also attacks Navient’s debt collection companies, which it accuses of engaging in “deceptive collection practices”, including “allegedly repeatedly misleading borrowers about their options to get their federal loans current through the federal student loan rehabilitation program”.
That’s a huge problem, because the Federal Student Loan Rehabilitation Program was created to help borrowers who have fallen behind on payments, but who are willing to get caught back up, removing their loans from default, and getting back into repayment status.
It’s one of the best and most important Federal benefits packages, since it’s basically like a “Get out of Jail Free” card for anyone who has a one-time problem with their student loans, because of issues like unemployment, injuries or other unexpected financial disasters, so it’s atrocious that Navient was taking advantage of the complexities of the program to keep their borrowers stuck in default.
But apparently that’s not all they did in terms of illegal collections activities, because Attorney General Madigan lawsuit also accuses them of “misrepresenting the eligibility requirements for disabled student loan borrowers to have their federal loan debt forgiven entirely” which I’m guessing means that Navient’s collections personnel lied about the rules of the Total and Permanent Disability Discharge Program.
And that’s probably the worst complaint against Navient in the entire series of lawsuits brought against them (thus far), because the Total and Permanent Disability Discharge Program was created to allow anyone who is completely and permanently disabled – meaning they could never earn an income again – to get rid of their loans without paying for them. My opinion? Taking advantage of people who are totally and permanently disabled isn’t just wrong, it’s downright evil.
The Washington State Attorney General’s Lawsuit Against Navient
Washington State Attorney General Bob Ferguson launched a lawsuit against Navient Corporation, an offshoot of Sallie Mae, on January 18th, 2017, alleging that the company committed “multiple deceptive student loan lending, servicing and debt collection practices”, with similar complaints to those found in the CFPB lawsuit and Illinois State Attorney General’s Lawsuit outlined above.
The result of a several years-long investigation in conjunction with the CFPB and the Illinois Attorney General’s Office, the Washington AG lawsuit accuses Navient of “improperly steering financially distressed students toward short-term forbearances, engaging in aggressive and misleading collection tactics and more”.
Specifics include accusations that Navient, operating as Sallie Mae, did all sorts of terrible things when determining who they’d lend money to, and how they’d approach that process, essentially strategizing to milk as much as they could from the federal student loan system as possible, which in my opinion, sounds like they’re being accused of stealing taxpayer dollars.
The Washington Lawsuit Complaints About Navient’s Lending, Servicing & Debt Collection Processes
In the words of the official complaint, the lawsuit accuses Navient of making “subprime, predatory loans to students attending for-profit colleges with graduation rates lower than 50 percent, despite clear expectations that an extremely high percentage of students would not be able to repay them… as part of “preferred lending” programs with schools in order to gain access to highly profitable federally-guaranteed loan volume and “prime” private student loan borrowers”.
Like the CFPB lawsuit and the Illinois lawsuit, the Washington lawsuit also accuses Navient’s servicing practices of “steering financial distressed federal loan borrowers into short-term forbearances, rather than assisting borrowers in applying for income-driven repayment programs where appropriate”, which again means that Navient was actively avoiding helping people out, hiding benefits from them, and using expensive forbearance programs to drive up their revenue.
Again, Navient is also accused of failing to “adequately inform those borrowers who did choose income-driven repayment programs of their yearly obligation o re-certify their income and family size”, instead sending those borrowers emails saying “only that that there was a document waiting for them and to log in to Navient’s website to learn more”, which borrowers ignored, resulting in being kicked out of their income-driven repayment plans, resulting in “significant monthly payment hikes”.
As a further failure of Navient’s role in servicing, this lawsuit also accuses them of “misapplying borrower payments and failing to follow borrower instructions concerning how excess payments should be allocated, causing borrowers to receive unnecessary collection calls, and requiring them to spend time correcting Navient’s mistakes.”
The final complaint about Navient’s servicing practices was the now familiar refrain that they “deceptively promoted a ‘co-singer release’ feature of private loans to entice family and friends to co-sign loans”, marketing these loans as allowing the co-signer to apply for release as soon as the borrower had demonstrated their ability to pay the debt, but in practice, “putting up arbitrary barriers and failing to disclose that very few borrowers ever achieve co-signer release”.
Finally, on the debt collection front, the lawsuit said that Navient attempted to “collect more than the amount necessary to cure the delinquency” from borrowers who had fallen behind in payments, asking for “the next month’s payment as well” in addition to the one that was actually due, referring to both the delinquent amount and the next month’s payment as the “Present Amount Due”, which is deceptive, and led borrowers to significantly overpay, or remain in delinquency when they could have gotten back into repayment had they known the actual amount required.
Like the Illinois lawsuit, the Washington Attorney General’s Lawsuit against Navient also asks the court to order the company to “stop these deceptive practices, and reform its loan servicing and collection practices”, but it doesn’t specifically call for “restitution” or any other sort of financial compensation from what I can tell, so I don’t think this lawsuit is as likely to lead to forgiveness benefits or refunds.
The Pennsylvania State Attorney General’s Lawsuit Against Navient
On October 5th, 2017, Pennsylvania Attorney General Josh Shapiro announced that he too was suing Navient, and again, for “widespread abuses” regarding the way they’d been handling their student loan administration duties.
This lawsuit could impact anyone living in Pennsylvania, including both Federal and Private borrowers, but especially those who’ve run into trouble with the way that Navient handled servicing or collecting their debt.
The Pennsylvania AG’s lawsuit against Navient makes 3 specific claims about Navient’s abuses, including:
- Navient offered predatory loans to students attending schools with graduation rates under 0%, despite clearly expecting that a high percentage of their borrowers would not be able to repay those loans, and would end up collections
- Navient disregarded evidence that the loans were likely to default at significant rates, and actually increased their subprime lending even after being warned about it, using subprime loans as a “baited hook” to convince some of the country’s biggest schools to turn them into a “preferred lender”, which allowed them to increase the volume of their loans, and the profitability of their loans (both federal and prime private loans)
- Navient steered borrowers into short-term loan forbearances and away from the better income-driven repayment plans that would have helped borrowers avoid interest accumulation, increasing the amount of money that Navient would collect ont heir loans, at the expense of the borrowers financial health, racking up $4,000,000,000 (BILLION) in interest charges using this deceptive, misleading practice
This lawsuit is quite clear in what it seeks to accomplish, and like the Illinois suit, and unlike the Pennsyvania suit, AG Josh Shapiro is looking for financial recompense for his borrowers, clearly asking the court to offer:
- Complete restitution to all borrowers impacted by Navient’s illegal lending, servicing and collections practices
- Disgorgement by Navient for all profits gained illegally
- Forcing Navient to stop collecting on any illegal loans that were issued, and to delete all negative credit details from any consumers impacted by their unlawful practices
- Rescission or reformation of all contracts and loan agreements between Navient and people living in Pennslyvania who were impacted by the illegal behavior
- Civil penalties, to be determined by the court
Navient has grown more and more brash over the course of these lawsuits being announced, however, and called the Pennsylvania AG’s lawsuit a “pointless, copycat lawsuit”, claiming that this suit is “legally deficient”, and that it will “unnecessarily burden the courts and parties, and would risk generating inconsistent rulings across the country.”
Instead of saying that they didn’t commit any of the illegal behavior they’re accused of in this lawsuit, they responded that it was “essentially cut and pasted from the FPB’s long ago filed complaint”.
I’m tracking this lawsuit, just like the others, and will continually update this page whenever any news is announced, so again, be sure to check back regularly for updates.
The California State Attorney General’s Lawsuit Against Navient
California’s Attorney General Xavier Becerra launched his lawsuit against Navient in June 2018, alleging that “Navient’s loan servicing abuses have compounded the misery of parents and students who sacrificed to pay for college”.
Like the other lawsuits, California accuses Navient of purposefully disrupted several different parts of the student loan repayment process, providing misleading information and steering borrowers into programs that weren’t ideal for them, but which would help Navient make more money off of their poor decisions.
The CA lawsuit is limited to Federal student loans.
The Mississippi State Attorney General’s Lawsuit Against Navient
Missississippi’s Attorney General Jim Hood launched his state’s lawsuit against Navient on July 17th, 2018.
Just like the other Attorneys General, this one also alleges that Navient conducted “deceptive and unfair practices” that violate Mississippi’s consumer protection laws.
This lawsuit seeks a injunction requiring Navient to change their business practices.
If Navient Loses, Will All Navient Loans Be Forgiven?
While I don’t think that all Navient’s loans are going to get forgiven completely, I would be surprised if we didn’t see at least some form of restitution offered to Navient’s customers.
I think we’re going to see some kind of forgiveness or refunds provided to Navient’s borrowers, servicing customers and collections targets, and I think the amounts will vary by state, and based on what those borrowers experienced in their dealings with Navient.
Basically, the more Navient screwed you over, the more money you should anticipate getting as a result of the lawsuits.
But for those of you who never really experienced anything illegal, I wouldn’t expect to receive much.
And for those of you who had your loans placed into forbearance even after asking about income-driven repayment plans, who had payments misallocated, or who lost money as a result of any of the other illegal practices outlined above, you may be eligible to significant compensation, but probably not complete forgiveness.
New Developments in the Lawsuits
A story from ABC News details how one of their weather men signed up for the Public Service Loan Forgiveness Program to get forgiveness on his Navient loan, made the required 120 monthly payments, then was told when he applied for the forgiveness benefit that he had the wrong type of loan, after Navient had been telling him all along that he’d qualify for the program!
A 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 its way out of owning up to the abuses they’ve carried out by saying that their job isn’t to help debtors, but to collect as much money as possible 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, using 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 find it highly unlikely that the Federal Government will be able to continue to allow Navient to serve as their largest student loan servicer, and my expectation is that the company will be broken up at some point in the near future, or have their loan servicing contracts removed or at least reduced.
Unfortunately, Navient Has Friends in High Places
Navient is receiving help from some people in pretty high places, like our terrible Secretary of Education, Betsy DeVos, who announced she was severing all ties between the Department of Education and the Consumer Financial Protection Bureau.
That means that Betsy DeVos killed CFPB’s access to new data from DOE, which will prevent them from being able to conduct investigations like the one they did against Navient, and which spurred all these lawsuits on in the first place.
I’m still confident that the courts are going to rule in favor of ordinary Americans, especially after it’s been made so plainly obvious that Navient is not attempting to help borrowers earn the forgiveness benefits they deserve.
I think Navient is in big trouble, and I’m still quite prepared to call these lawsuits in favor of the little guy, no matter what dirty tricks Secretary DeVos has up her sleeve.
President Trump & His Plan for Student Debt
Making things worse is President Trump, who each year suggests new plans to restructure the Federal student loan and student loan forgiveness system in ways that I can only say wouldn’t be in the interest of most borrowers.
President Trump’s Plan for Student Loans include three major changes, each of which aren’t going to help anybody other than his friends at the big servicing companies or the for-profit schools (the same people Betsy DeVos is constantly sucking up to), including:
- Reforming the Federal Income-Driven Repayment Plans
- Eliminating the Public Service Loan Forgiveness Program
- Eliminating 100% of Subsidized Student Loans
All three of these decisions are going to make things worse for many borrowers, and if you’d like the details on exactly how this is all supposed to play out, please visit my page on President Trump’s Student Loan Debt Reform Plans here.
How to File a Borrower’s Defense Discharge Complaint
Since DOE isn’t allowing us to file BDAR Discharge Applications against student loan servicing companies, you can’t place a complaint against Navient, but you can attack the school you attended and attempt to get Navient to forgiven the loan anyway.
The thing about this is that you’re going to have to put together a compelling case that accuses the school of having done something illegal against you, either via violating a State or Federal law, or committing some form of fraud.
I’ve outlined exactly what this process looks like, and the sorts of examples you’ll need to come up with, on my Guide to the Borrower’s Defense Against Repayment Program, so please give that a read when thinking about how to structure your claim.
2020’s Best Student Loan Forgiveness Programs
There are literally tons of ways to get help with students loans these days, especially for people who need Help With Federal Student Loans, but keep in mind that there’s also more Help for Private Student Loans available now than ever before, so no matter how you owe the money, you’re almost sure to find some program that can get you assistance.
Some of the most powerful financial assistance programs on offer this year are those offering forgiveness based on your income, employment, or other similar eligibility conditions, with most of these providing benefits to people working in certain high-need sectors.
Basically anyone with Federal loans will qualify for some form of Federal Student Loan Forgiveness at some point in the repayment process, so I highly recommend that you investigate the other pages of my site covering Federal Forgiveness Programs in detail, including:
- Federal Student Loan Forgiveness Programs Overview
- President Obama’s Student Loan Forgiveness Program
- The Pay As You Earn Student Loan Repayment Program
- The REPAYE Student Loan Repayment Program
- President Trump’s Student Loan Forgiveness Program
- The Public Service Loan Forgiveness Program
- Nursing Student Loan Forgiveness Programs
- Doctors & Dentists Student Loan Forgiveness Programs
- The Non-Profit Employee Student Loan Forgiveness Program
- Military Personnel Student Loan Forgiveness Programs
- Teacher Student Loan Forgiveness Programs
- Government Employee Student Loan Forgiveness Programs
- State-Based Student Loan Forgiveness Programs
But people with Private loans aren’t getting left in the dust like they used to either, as there are now more Private Student Loan Forgiveness Programs available than ever before too!
You’re almost certain to qualify for at least one, if not more, of the excellent forgiveness programs listed above, so even if you can’t get your Navient loans forgiven as a result of these lawsuits or a BDAR discharge, you shouldn’t give up – you’ll just need to conduct a little bit more research before figuring out what exactly you need to do to wipe out that debt.
2020’s Best Student Loan Discharge Programs
Assuming you meet the worst case scenario and can’t qualify for any of the forgiveness programs listed above, you’re still not out of luck, because there are also plenty of Student Loan Discharge Programs currently available, including some excellent options for those with Federal loans, like:
- The Borrower’s Defense Against Repayment Program
- Federal Student Loan Bankruptcy Discharges
- The Closed School Student Loan Discharge Program
And don’t forget that Borrower’s Defense can be used to attack any school! If you need help getting loan relief from one of the big for-profits, I’ve got you covered. Check out my guides to getting Borrower’s Defense Discharges from For-Profit Schools, linked below:
- The DeVry Student Loan Discharge Program
- The ITT Tech Student Loan Discharge Program
- The University of Phoenix Discharge Program
- The Westwood College Discharge Program
- The Walden College Loan Discharge Program
- The Art Institutes Discharge Program
- The Full Sail University Discharge Program
- The Corinthian Colleges Discharge Program
- The Heald College Discharge Program
- The Wyotech Discharge Program
- The Le Cordon Bleu Discharge Program
- The Kaplan University Discharge Program
Loan Forgiveness & Taxable Income Laws
One thing to keep in mind is that if you do receive any form of Student Loan Debt Forgiveness benefit, you’re going to need to make sure that you understand whether or not it’ll come with any tax liabilities attached, because most of the time, the IRS is going to require that you claim the amount of money forgiven as taxable income in your IRS return.
It sounds insane (trust me, I know), but the IRS requires you to declare any loan forgiveness benefits you receive as “taxable income” during the year you receive them, which means that you’ll end up owing taxes on whatever amount of debt you get forgiven, and you’ll have to pay the same tax rate on the forgiven debt that you’d pay for regular income.
Don’t neglect this important part of the forgiveness process, because taxable income laws are a big deal. As an example, if you pay something like 20-30% in income taxes, and you had $10,000 in debt forgiven, you’d owe $2,000 – $3,000 to the IRS at the end of the year, and you’d be forced to make that payment in a lump-sum, one-time amount, rather than stretched out over a period of many years (like you get to do with student loans).
To find out exactly how it all works, visit my page about Student Loan Forgiveness Benefits and Taxable Income Laws.
Don’t Get Devastated by the Taxable Income Trap
For people with huge debt loads, like $100,000 or more, this can end up getting them into way bigger trouble than simply having to make monthly student loan payments, because they could find themselves with a tax bill of something like $20,000 – $30,000, again, due all at once! Who has that kind of money laying around?
Because of all the forgiveness benefits coming due in the near future, through programs like Nursing Student Loan Forgiveness Benefits, Military Loan Forgiveness Programs, Non-Profit Forgiveness and Government Employee Forgiveness, I’m certain that we’re going to see all sorts of people in all sorts of trouble with the IRS.
And that’s exactly why I created a new website, called Forget Tax Debt, where I go through the same kinds of information I do here at Forget Student Loan Debt, but offering the same type of advice for dealing with back taxes and IRS debt instead.
If you are worried about facing tax problems, or if you’ve already got some, please visit Forget Tax Debt to find out how to do things like Apply for the IRS Fresh Start Program, Hire a Reliable Tax Resolution Company, or Settle Your Debt with the IRS.
To Get Help With Federal Student Loans
If you don’t qualify for any of the forgiveness or discharge programs above, don’t worry, because you may still be eligible for all sorts of other Federal assistance programs.
To figure out what benefits you may be able to utilize, take a look at my Guides on Federal Student Loan Relief:
- Federal Student Loan Bankruptcy
- Federal Student Loan Consolidation
- Federal Student Loan Delinquency & Default
- The Federal Student Loan Rehabilitation Program
- Federal Student Loan Wage Garnishment
- Federal Student Loan Deferment
- Federal Student Loan Forbearance
- Federal Student Loan Repayment Plans
To Get Help With Private Student Loans
If you have Private student loans, then look at my Guides on Private Student Loan Relief Programs, which you can find here:
- Private Student Loan Forgiveness Programs
- Private Student Loan Consolidation
- Private Student Loan Bankruptcy
- Private Student Loan Defaults
If you can’t find anything that helps from my site, then please post a Comment below and let me know what your situation is.
I’ll review your case myself to see if I can come up with anything that might help!
Check Back in Regularly for Updates
Whenever more details about these lawsuits, the eventual settlements or 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 so I can add it here.
Again, if you have other questions that haven’t already been answered here, or if you have any updates or news that hasn’t been included in this story, please feel free to share them in the Comments section below.
Finally, Please Help Me Out!
Running this website is like working a second full-time job, and I can only continue to dedicate the time and effort required to build Guides like this one if people like you help me out in return!
I will never ask for a donation from my readers, but I do want to ask for your help in spreading the word that this site exists by sharing a link to it on Facebook, Reddit or Twitter.
The more people who visit FSLD, the more time I can dedicate to writing up Guides like this one, and helping borrowers like you!
Thank you for visiting, and thank you for your support.
- The CFPB Lawsuit Against Navient
- The Illinois Attorney General’s Lawsuit Against Navient
- The Washington Attorney General’s Lawsuit Against Navient
- The Pennsylvania Attorney General’s Lawsuit Against Navient
- Other Resources
Disclaimer:Information obtained from Forget Student Loan Debt is for educational purposes only. You should consult a licensed financial professional before making any financial decisions. This site receives some compensation through affiliate relationships. This site is not endorsed or affiliated with the U.S. Department of Education.