How to Qualify for a Navient Student Loan Refund or Discharge
NEWS ALERT: There’s been good movement in the Navient lawsuit, including a ruling from December 2018 that denied Navient’s request to have the lawsuits against them dismissed on the grounds that States shouldn’t be able to regulate their business operations.
What’s that mean for you, the Navient borrower? It significantly increases the chances that Navient will end up being forced to offer massive payouts to wronged borrowers, which should add credence to any Borrower’s Defense Discharges filed against them.
This ruling shuts down the idea promoted by the Education Secretary Betsy DeVos, and the servicing companies themselves, by clearly indicating that student loan servicers are NOT immune to state laws, and that they can he held liable for breaking state rules.
This is a big win for all of us, and another good sign that we’re headed the right direction!
The rest of this post goes into detail about the Navient lawsuits, covering where they’ve come from, what they’re about, what they may mean for borrowers, and what to expect from the future.
Finally, I have to report one other piece of bad news, which is that the Department of Education is NOT accepting Borrower’s Defense to Repayment Discharge applications against Student Loan Servicing Companies, and which means you cannot use the BDAR Program against Navient.
That means the best way to discharge your Navient loans is no longer to pursue a case against them, but to pursue one against your School. This page has been updated to reflect that.
The Navient Student Loan Lawsuit Could Make Loan Forgiveness Available to Everyone
In 2019, Navient, the country’s largest student loan servicing company, is still facing several massive lawsuits brought against them by the Consumer Financial Protection Bureau and the Attorney Generals of Illinois, Washington and Pennsylvania, all of whom have accused Navient of grossly mishandling their Federal student loan servicing and processing duties.
What this means for you is that you may be eligible to have your Navient-related loans forgiven via the Borrower’s Defense to Repayment Program, IF the lawsuits are successful and the Department of Education starts accepting BDAR Discharge Applications against Student Loan Servicing Companies.
Unfortunately, the odds of this happening are slim to none as long as Betsy DeVos remains the head of the DOE, so for now, we all need to keep our fingers crossed that either the Navient lawsuits are resolved in our favor, or that President Trump is defeated in the 2020 Presidential Election and Betsy DeVos is removed from power.
However, while you can’t use the BDAR Discharge Program to file a case against Navient, you can still use it to file a case against the school you borrowed money to attend, and getting a discharge vs that school WILL get your Navient loans forgiven, so you should still take a close look at how BDAR works, and think about utilizing it to get rid of your loans!
If you’re in a hurry and just want to get to the section of this Guide that explains how to eliminate loans via BDAR, then head to the section called How to File a Borrower’s Defense Discharge Application.
For those of you who don’t think you’d qualify for a BDAR Discharge, or who simply don’t want to deal with the process, don’t be dismayed, because I’m quite confident that you too will be offered some form of loan forgiveness, and perhaps even a refund, once the Navient lawsuits are settled.
In fact, I am almost certain that ALL Navient borrowers will see at least some form of loan forgiveness or refund benefit this year, so make sure to bookmark this page and check back regularly, because I’ll update it whenever news is announced.
Now, let’s go through the history of the student loan crisis and the Navient lawsuits to explain why all this is happening, and how you may be able to use it to eliminate your loans without paying another penny.
Quick Links to Specific Sections Within This Comprehensive Guide
To help you 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?
- Why Do These Lawsuits Matter?
- 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
- New Developments in the Lawsuits
- Will All Navient Loans Be Forgiven? Will All Borrowers Receive Refunds?
- Unfortunately, Navient Has Friends in High Places
- President Trump’s Plans for Reforming Student Loans
- Navient Is Not Your Friend
- What Should I Do? File a Borrower’s Defense Discharge Complaint?
- How to Increase the Chances that Your BDAR Discharge Application Gets Approved
- 2019’s Best Student Loan Forgiveness Programs
- 2019’s Best Student Loan Discharge Programs
- Loan Forgiveness & Taxable Income Laws
But Before I Explain the Navient Lawsuits, Forgiveness Benefits & Refunds…
Let me first clue you in on the dirty little secret that Navient and every other student loan servicer doesn’t want you to know: even if you can’t take advantage of the Navient lawsuit settlement or the Borrower’s Defense to Repayment Program, you still have all sorts of other options for dealing with your student loans!
There are a number of ways to reduce your monthly payments via consolidation, restructuring, changing repayment plans, or taking advantage of forgiveness, deferment or forbearance programs which are available to virtually everybody who borrowed their money from the Federal Government.
If you are struggling with FEDERAL student debt, but haven’t yet gone into default, then my suggestion is to call the Student Loan Relief Helpline to see if they can help you right the ship by getting you back on track with a better repayment program or a debt consolidation.
DO NOT call the Helpline for questions about lawsuits, Borrower’s Defense, or if you’ve already defaulted on your loans, because they will not be able to help you, but if your loans are still in repayment or delinquent status, then give them a shot at helping improve your finances!
Call the Student Loan Relief Helpline now at 1-888-906-3065.
Why Do the Navient Lawsuits Matter?
These lawsuits against Navient matter because they prove that we’re finally headed the right direction on the student loans crisis, with the Federal Government, the Consumer Financial Protection Bureau, and several States Attorney Generals all standing up for ordinary Americans and attacking the country’s largest student loan servicing company.
What these lawsuits show is that there’s a sea change occurring across America, and that the tide is turning against the massive corporations who’ve been raping and pillaging ordinary Americans bank accounts for decades. Just so you’re aware of how big this movement has gotten, Navient isn’t the first servicer to get sued, as there are already pending lawsuits against FedLoan, the National Collegiate Student Loan Trusts, and Aequitas Capital too.
But it’s not just the student loan services under attack, because some of the country’s biggest and most well-known schools have also been getting hammered by complaints and lawsuits as well, with DeVry, Corinthian Colleges, ITT Tech, University of Phoenix, Westwood College, Walden University, Full Sail University, Heald College, WyoTech, Le Cordon Bleu, and Kaplan College all experiencing significant problems continuing on with business as usual, due to all the negative consumer reviews and legal issues they’re facing.
At the end of the day, we should all be celebrating that the student loan crisis is finally getting the attention it deserves, and I want to particularly point out that anyone who still owes money to Navient, or who has already paid off a Navient or Sallie Mae student loan needs to be paying close attention to these lawsuits because they could end up offering you tens of thousands of dollars via loan forgiveness or refund opportunities.
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 three separate lawsuits from the States Attorney Generals of Illinois, Washington, and Pennsylvania.
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.
If you’ve ever dealt with Navient personally, and experienced any of the illegal business practices that the lawsuits accuse them of committing, then the good news is that you’re very likely to be eligible for a complete student loan discharge via the Borrower’s Defense Against Repayment Program, which I’ll explain in detail below.
And if you feel bad about pursuing a forgiveness discharge against Navient, because you think maybe you had something to do with your student loan servicing problems, it may be time to reevaluate that opinion, because Navient’s issues are no longer a secret: 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 be, what the settlements could look like, and finally, how you can take advantage of the accusations against Navient to pursue your very own complete student loan discharge via the Borrower’s Defense to Repayment Program. If you’re in a hurry, skip to that section of this post by clicking here.
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 enrol 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. Seriously guys?
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.
The good news about this whole thing is that these allegations will open Navient up to being attacked via the Borrower’s Defense Against Repayment program once the rules are changed and BDAR works against student loan servicers.
When will that happen? It may never, but if the Democrats retake the Presidency and install student loan-friendly personnel at the Department of Education, then we’d have a really good chance of it getting approved. Especially if Elizabeth Warren or Bernie Sanders are involved.
In the meantime, you’ll want to look at utilizing the BDAR program to file a claim against your school, instead of Navient, since it offers complete student loan forgiveness benefits to people who’ve been wronged by their school, and those approvals are being handed out presently.
If you’ve ever had an experience with Navient where it’s clear that they advised you to do something against your own best interests, then you should document it, keep that stored somewhere, and wait to see if DOE starts letting us file BDAR Discharges against Servicing Companies, but for now, you want to look into filing against your school instead.
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”, and again, if you’ve experienced this personally, it means you’ve got a great chance at getting approval for that Borrower’s Defense Discharge, once we’re allowed to use them against Servicing Companies, so make sure to start putting together materials required for submitting an application.
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”, which means that even if you can’t get approved for one of those BDAR Discharges I keep talking about, 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.
Will All Navient Loans Be Forgiven? Will All Borrowers Receive Refunds?
While I don’t think that all Navient’s loans are going to get forgiven completely, I wouldn’t be surprised if we didn’t see at least some form of restitution offered to 100% of Navient’s customers, including specific offerings for people at each step of the lending process.
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, so for those of you who never really experienced anything illegal, I wouldn’t expect to receive much, but 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, I think you’re going to receive significant compensation in the settlements of these suits.
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, which means that the CFPB won’t have access to any 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.
Does it really matter though? We all know Betsy DeVos is nothing more than a stooge for the student loan lenders, the student loan servicing companies, and the terrible for profit colleges, so I don’t think anyone with any integrity will take her opinion on these matters seriously, and since the cat has long been out of the bag on Navient, I don’t think CFPB needs any more data than they’ve already collected against Navient itself.
My opinion is that DeVos is only further disgracing herself (and President Trump via association), with her terribly obvious corrupt moves to try and destroy all credibility of the Education Department, attacking student loan borrowers by doing things like trying to kill the Public Service Loan Forgiveness Program, attempting to pause the Borrower’s Defense Against Repayment Program, and now shutting the CFPB off from DOE data.
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, instead trying to obscure any forms of financial assistance from their customers and literally doing anything they could to prevent borrowers from understanding how to reduce the costs of their loans.
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 has announced official 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.
Navient Is Not Your Friend
Even borrowers who should have qualified for financial relief programs like Economic Hardship Deferments, monthly student loan payments set at $0 because of insanely low incomes, and other significant money-saving solutions were actively denied the right to take advantage of those programs by Navient, and forced to repay 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 proper business practices that their lawsuit has a great chance of writing all the wrongs Navient has committed, and helping those of us who still owe Navient money get out of debt for good.
Not only is Navient accused of providing “bad information” over the phone, but they’ve also been said to have sent out blatantly incorrect information in writing (purposefully?), totally screwed up handling their payment processing duties, and generally making it much harder for borrowers to qualify to pay for any of the excellent Income-Driven Student Loan Repayment plans that would have saved them tons of money each month.
So remember, even if you’re the “turn the other cheek” type of person, Navient is not your friend, and you shouldn’t feel bad about pursuing a Borrower’s Defense Discharge against them. This company is accused of committing all sorts of highly illegal and immoral activities against its borrowers, and it deserves to be punished if these allegations are proven true in court.
Navient doesn’t deserve your trust, friendship, or continued business, and you shouldn’t hesitate to attempt to get their student loans forgiven now, because there’s never been a better time to pursue a Borrower’s Defense Discharge.
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.
The other thing to do is to file a complaint against your school, hoping it will stick, but to also start preparing to file a claim against Navient themselves, in the chance that Betsy DeVos gets replaced and student loan laws are reformed, which is likely to happen if the Democrats retake the Presidency in 2020, or beyond.
Now that there is so much public record of all the illegal practices Navient used to suppress student loan borrowers knowledge about how to reduce the costs of their debt, and there’s so many different things that Navient has been accused of doing that were both immoral, but also highly illegal, there’s literally never been a better time to write up a Borrower’s Defense Complaint against the company.
While you won’t be able to submit it yet, since there’s no current process for submitting against Servicing Companies, I think it’s worth spending the time to put together since we will likely eventually see this offered by the Department of Education. It’s even possible that the resolution of the Navient lawsuits will force Betsy DeVos’s hand, and require the Department of Education to start accepting BDAR Discharges against them.
What you’ll need to do to get your application approved is to make sure that you point to some specific illegal behaviors that Navient committed against you, so you need to think back about all of your interactions with the company and see if you can remember any times that they did something blatantly illegal which harmed your ability to understand or leverage the benefits that you were legally entitled to.
How to Increase the Chances that Your BDAR Discharge Gets Approved
If we get to the point that BDAR Claims can be filed against Navient, then you’ll want to pay close attention to my advice here, because it’ll determine whether or not your claim is approved.
Read through the lawsuit allegations listed above in this post and think about whether or not you directly, personally experienced any of the same things that the CFPB or the State Attorney Generals from Illinois, Washington and Pennsylvania have accused Navient of doing to their borrowers, then list those as the reasons why your debt should be discharged when filling out your Borrower’s Defense Application.
But keep one thing in mind – DO NOT LIE OR EXAGGERATE ANY CLAIMS in your Borrower’s Defense Complaint, because this is a legal document, and if you abuse it, you could open your own self up to counter suits, fines, fees, penalties, etc. Also, don’t ruin a good thing that people who have seriously been harmed deserve to have access to.
If you didn’t experience illegal behavior by Navient, don’t accuse them of having done anything, and don’t pursue a BDAR Discharge, but instead look through the other pages of my site and see if you can take advantage of some of the other forms of loan forgiveness, discharges, or financial assistance programs currently on offer, as there’s plenty of assistance to go around these days.
2019’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.
2019’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
And if you happen to have loans serviced by someone other than Navient, you may have a shot at going after them for the same sorts of illegal behavior that Navient has been accused of, as many of the largest student loan servicing companies across the country have been hit with similar lawsuits of their own, including:
- The FedLoan Discharge Program
- The National Collegiate Trust Discharge Program
- The Aequitas Capital 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.
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.
- 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.