Navient’s Class Action Student Loan Lawsuit Settlement
Good news! The Federal Government, the Consumer Financial Protection Bureau and several States have stepped up their war on Navient’s terrible student loan debt servicing processes, initiating several massive lawsuits, including a class action lawsuit, accusing Navient of totally mishandling their student loan servicing and processing duties.
With pending lawsuits in Pennsylvania, Illinois, and Washington, the hammer is about to fall on this corrupt, immoral company, widely-regarded as one of the worst student loan servicers in the country, and I see very little chance that Navient wins any of these lawsuits, even with all the help that corrupt Education Secretary Betsy DeVos is trying to give them (by doing things like cutting ties with the CFPB).
In fact, I think that there’s a very good chance that all Navient customers are going to see significant refunds or some other form of student loan forgiveness benefits at some point in the near future (likely 2018), depending on how quickly these lawsuits get settled.
What’s The Big Deal? Companies Get Sued All The Time…
These lawsuits against Navient prove that we’re finally headed the right direction on student loans, with all sorts of corruptions being stamped out by the Federal Government and industry watchdogs (like the CFPB), including their recent attacks on terrible For-Profit schools like DeVry, Corinthian Colleges, and ITT Tech, and this new round of attacks targeting immoral student loan servicing companies, like Navient, FedLoan, the National Collegiate Student Loan Trusts, and Aequitas Capital.
If you owe money to Navient, or if you’ve already paid off a Navient (or Sallie Mae) loan, then you need to pay close attention to these lawsuits, because you may just get lucky, and be able to save thousands or even tens of thousands of dollars, depending on how they turn out.
Bookmark this post and make sure to return to it at least monthly for updates regarding the lawsuits and eventual emergence of what I’m tentatively calling the Navient Student Loan Forgiveness Program.
Are Navient Student Loans Being Forgiven?
Not yet, but there’s a good chance that they will be, at least in part, and soon!
There’s no official announcement about how the Navient and Sallie Mae lawsuits will be resolved, but with so much heat on the servicer, and the Consumer Financial Protection Bureau accusing them of “systematically and illegally failing borrowers at every stage of repayment”, you can be pretty sure that Navient isn’t going to get away with their corruptions any longer.
While we won’t know details of refunds or forgiveness benefits until settlements are reached, my gut tells me that we’ll see a ruling in favor of borrowers, and at least some sort of financial relief or financial assistance program created to offer monetary rewards to borrowers who were abused, misled, and outright defrauded by Navient (and Sallie Mae).
I’m fairly certain that at some point in 2018, these lawsuits are going to get resolved and we will see the introduction of the biggest Federal and Private Student Loan Forgiveness Programs ever created. I’d put money on it that these programs will be called something like the Navient Student Loan Forgiveness Program, the Navient Student Loan Relief Program, or the Navient Student Loan Refund Program.
But Before We Dive Into Details…
Before I launch into explaining the details of the CFPB Lawsuit against Navient, I want to let you in on a little secret: there are already all sorts of ways that you can attack your outstanding student loan debt, like by modifying your loan terms to decrease your monthly payments, applying for one of the many forgiveness benefits programs already available, or even by challenging the legal validity of your loans via a Borrower’s Defense to Repayment Discharge!
The problem with student loan debt is that most people have no idea to do with it, and many can’t even figure it out even after reading through a website like mine, because the system is overly complicated, involves all sorts of legal jargon, and has tons of stupid rules that were created to prevent you from getting out of paying back your loans.
And that’s precisely why I recommend hiring an expert to help you, because only hired guns and true student loan relief experts will be able to look at your loans, review your background, and tell you exactly what you need to do to get rid of your debt as quickly and affordably as possible.
While we’ve all heard about the many Student Loan Forgiveness Scams floating around, I’ve been lucky enough to find ONE company that I trust to help my readers: The Student Loan Relief Helpline. The Helpline is staffed by true student loan debt experts, people who know about all the secret programs offering debt discharges and debt forgiveness benefits, and they’re the only people I’d recommend you consider paying to help with your loans!
To reach the Student Loan Relief Helpline, call 1-888-906-3065. Your first call to them is free, and you’ll only be charged if you agree to have them work on your loans for you, so you’ve got nothing to lose by calling them now and asking them what they think your best options are for attacking your debt.
The CFPB Lawsuit Against Navient (Sallie Mae)
The Consumer Financial Protection Bureau recently announced a series of new lawsuits filed against Navient (which used to be called Sallie Mae), in which they accuse the nation’s largest student loan debt servicer for “Failing Borrowers at Every Stage of Repayment”.
In fact, the CFPB has not pulled any punches, and actually wrote into their lawsuit documents in Pennsylvania that Navient is “systematically and illegally failing borrowers at every stage of repayment.”
The important part of that statement is the “illegally” piece, which could mean that anyone who’s been “illegally” treated by the servicer may have some recourse to receive refunds or forgiveness benefits on the loans they’ve already paid back, or at least whatever’s left of their outstanding balance.
What is Navient Accused Of?
In one lawsuit, the CFPB states that Navient conducted illegal behavior by cheating “borrowers out of repayment rights through shortcuts and deception”, which is a HUGE deal!
If you’ve been paying attention to student loan debt laws in recent years, then you’ll be well aware of the ever popular “Defense Against Repayment” provision, which allows borrowers to apply for a complete debt discharge in return for proving that the school they attended did something illegal to encourage them in taking out loans.
More specifics have recently emerged and it looks like Navient’s biggest crime was taking shortcuts when handling situations for their borrowers, failing to operate in the borrower’s best interest (by getting people enrolled in the Income-Based Repayment Programs that offer loan forgiveness after a set period of time, and instead, pushing people to sign up for Forbearance and Deferment benefits, which take less time to set up, but create a future debt-bomb.
And not only was Navient doing this, but they were doing it strategically, because they’re claiming they aren’t being paid enough to offer the service that’s in the best interests of their borrowers, as it’s more time consuming than the simple solution (which traps people to never-ending debt cycles!).
I can’t see any reason why this behavior wouldn’t qualify borrowers for a Defense Against Repayment Discharge, so if you’ve had any similar activity from Navient, where they advised you to do something AGAINST YOUR BEST INTERESTS, then I would highly advise you get right on drafting your Defense Against Repayment letter, and pushing for loan foriveness.
In my opinion, basically anyone who’s been assigned Navient/Sallie Mae as their loan servicer will be able to easily qualify for the Defense Against Repayment benefit program, and be able to pursue a student loan discharge.
Does The Lawsuit Cover Federal And Private Loans?
Yes, and that’s perhaps the best part about this whole deal; both Federal Student Loans and even Private Student Loans are impacted by this lawsuit, as Navient is the country’s largest student loan servicing company, holding about $300,000,000 (300 BILLION) in outstanding loans, including about one quarter of all outstanding student debt in America.
The specific complaint from the CFPB accuses Navient of “creat[ing] obstacles to repayment by providing bad information, processing payments incorrectly, and failing to act when borrowers complained”.
As I’ve said for years… always contact your loan servicer first when you have questions about your loans, but don’t give up just because they told you No! That’s where sites like mine, consumer protection groups like the CFPB, attorneys and other consumer advocates can enter the fray and literally save your day, as we have nothing to gain by preventing you from acquiring the benefits you’ve earned!
Navient is further accused of having “illegally cheat[ing] many struggling borrowers out of their rights to lower repayments, which caused them to pay much more than they had to for their loans”, and again… can you believe it? Literally, the largest servicer in the world, and they were literally acting like movie villains? How could anyone at Navient have thought they’d get away with something like this… don’t ask me…
On the bright side, the CFPB isn’t just attacking Navient for the sake of ruining their business, but has also clearly indicated that they seek to “recover significant relief for the borrowers harmed by these illegal servicing failures”. What’s that mean? It means if you got screwed by Navient/Sallie Mae, you’ve probably got some money coming your way soon.
New Developments in the Case
A new story from Bloomberg has shed additional light on the contentious relationship between Navient and the CFPB, and it looks like Navient is attempting to weasel it’s way out of owning up to the abuses they’ve carried out.
Navient is attempting to escape from any liability for failing to help loan borrowers pay back their loans as quickly as possible, saying that their job is not to help debtors, but to collect money for the U.S. Department of Education.
And while this is technically true, it’s turning into a public relations disaster for Navient, especially since the CFPB has been accusing them of all sorts of additional offenses, and more details are emerging about the specifics of their systematic abuse.
In my opinion, it’s not even what they’ve done that makes me the most upset, but it’s the attitude with which they’re treating the situation, attempting to dismiss it entirely and walk away scott-free. With arguments like “We’re not being paid enough for that”, “Doing the right thing takes too much time”, or “We’re just here to collect”, I don’t know how the Federal Government could possibly allow them to continue operating as their largest debt servicer.
And, in fact, that’s what many prominent Student Loan Debt experts are now calling for! Hopefully, these experts will be listened to and Navient will get it’s comeuppance, being sued, forced to write down the debt of hundreds of thousands to millions of Americans, and then put out of business by getting fired by the Federal Government.
In my opinion, Navient deserves no quarter here.
But That’s Not All…
Navient is now receiving help from some people in pretty high places, like our terrible Secretary of Education, Betsy DeVos, who just 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.
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 the cat has long been out of the bag on Navient, so I don’t think CFPB needs any more data than they’ve already collected.
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, but has done the complete opposite, and tried to obscure any forms of financial assistance from their customers, literally doing anything they could to prevent them from understanding what to do with 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 tricks Secretary DeVos has up her sleeve.
Background on Navient
Not only was Navient the most well-known student loan servicer, but they were also quite literally the largest, with over 12 million borrowers and more than 6 million borrowers of Federal Student Loans, and total outstanding loans of over $300 billion dollars (combined Federal and Private debt).
Navient was supposed to operate like a simple bank, loaning out money, then collecting it (while following US laws), but apparently that all went out the window in 2009, just after President Obama’s Student Loan Forgiveness Program was officially launched.
While President Obama’s program was supposed to offer student loan relief for all borrowers, in a variety of ways, Navient apparently decided to go their own route, and in some cases totally disregard changes made to student loan laws, while in others, simply misleading their borrowers about whether or not they were eligible for specific benefits.
CFPB alleges that the income-driven repayment plans and their many benefits (such as tax and interest deferments) were being actively suppressed by Navient, even for those borrowers who qualified to receive the benefit.
Navient Is Not Your Friend
Even borrowers who should have qualified with things like Economic Hardship Deferments, $0 monthly loan payments and other significant money-saving solutions were actively denied the right to leverage them, and forced to repay back far more debt than they actually owed.
Fortunately, CFPB has finally gathered enough evidence of Navient’s systematic disregard for current student loan laws, and is now acting on our behalf to try and protect the rest of the borrowers with outstanding Navient debt.
Not only is Navient accused of providing “bad information” over the phone, but they’ve also been said to have sent out improper information in writing, incorrectly (and it sounds like purposefully..) processed payments, and made it harder for borrowers to qualify to pay for any of the excellent Income-Driven Student Loan Repayment plans.
And not only did these practices make things harder for borrowers, but they are also highly illegal, and likely to land Navient in some serious hot water. I would not be surprised to see Navient split up into a million tiny splinter servicers, then sold off to the highest bidder, as it’s exceptionally rare that this company will ever again manage to earn the trust of the average American consumer.
What are the Specific Allegations of the CFPB’s Lawsuit?
The Consumer Financial Protection Bureau isn’t just moving on Navient for being hard to work with, or for being obstructionist in their ways, but they’re accusing the company of violating some pretty serious laws, and making some major breaches of standard business ethics, including:
- Failing to Apply Borrower Payments to Their Accounts
- Stromarming Borrowers to Pay More Than They Had To
- Hiding Details People Needed to Maintain Lower Payments
- Lying to Private Borrowers About Requirements to Release Co-Signers
- Ruining the Credit Scores of Disabled Borrowers, Including Veterans
If that list doesn’t read like something out of a Soap Opera, then I don’t know my butt from a hole in the ground…
My thinking? The Consumer Financial Protection Bureau has Navient dead to rights, and has probably been working with some high level, or at least mid-level whistleblowers who are prepared to totally rain on Navient’s parade.
Can you say… treat other people as you want to be treated? Apparently, Navient’s command staff forgot about the Golden Rule, and has been doing anything they can to spur short-term profit growth, probably to hit bonuses, increase the value of stock options, etc.
At the end of the day, it doesn’t really matter what Navient actually did, so long as they’re nailed for 1 or 2 big illegal activities, because that alone will set them up for a series of class-action lawsuits, and it’ll make it possible for anyone who’s borrowed from them to pursue their own personal Defense Against Repayment Discharge.
What Should I Do?
Right now, there’s not a whole lot that you can do other than wait, because these lawsuits against Navient need to be resolved before we’ll be able to figure out what kind of benefits are going to be offered to borrowers.
As of yet, no details have emerged about a potential settlement, there isn’t an official program, or any applications documents to fill out, so nothing has actually changed quite yet, and my advice is to basically hang tight and keep a close eye on future developments.
However, with that said, I do recommend calling the Student Loan Relief Helpline to ask them if they think you qualify for any of the debt forgiveness programs that already exist, from things like the Public Service Loan Forgiveness Program to the Borrower’s Defense Against Repayment Program, Closed School Loan Discharges, or even Bankruptcy Discharges, because you never know what you might be able to do with your loans until you talk to an expert.
Again, the Student Loan Relief Helpline is not a scam; they’re literally the only people I trust to send my readers to, and the only people I think provide a service worth the cost (typically, a few hundred dollars to review all your materials, then start pursuing whatever benefits you’re eligible for on your behalf).
The best thing about the Helpline is that they will literally do everything for you, instead of just giving you advice and recommendations. They’ll do the research, they’ll compile the paperwork, and they’ll even submit it for you!
To find out if they can help, call the Student Loan Relief Helpline now at 1-888-906-3065.
Anything Else I Can Do?
Yes! Even if you don’t want to call the Helpline (you should though, because your first call is free…), I would absolutely recommend that you start getting your documents and financial records in order, because at some point, refunds will likely be issued, and the best way to ensure that you’ll get access to your own portion of funds is going to be to get your application in early.
Like a lot of other Government-funded relief programs, I wouldn’t be surprised if the requests for approval and benefits will far outweigh the ability of the Federal, State and local governments to provide borrowers with recompense.
What’s that mean? It means you need to find out how much you’ve paid to Navient (or Sallie Mae), make a record of each payment you submitted, document (to the best of your ability) any conversations you had with them regarding Student Loan Repayment plans, and be prepared to fight the good fight, because at some point you will probably need an attorney.
Look Into Student Loan Forgiveness & Taxable Income Laws
Since we’re probably going to see some sort of forgiveness program emerge as a result of the Navient lawsuits, one thing that’s really important for you to understand is that any time you receive loan forgiveness benefits, you will need to pay taxes on them to the IRS.
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 owe 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.
To find out exactly how it all works, visit my page about Student Loan Forgiveness Benefits and Taxable Income Laws.
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).
Forgiveness Taxable Income Laws Could Be Devastating
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.
Where Can I Go For More Information?
To get the words straight from the horse’s mouth, you’ll want to head on over to the official Consumer Financial Protection Bureau website, which is located at: http://www.consumerfinance.gov/, or by clicking this link to the official announcement of the CFPB lawsuit.
Or, feel free to ask questions in the comments section below. I check the site daily and try to get everyone a response to their concerns within 24 hours of them posting, so don’t be shy, and don’t be afraid to sound stupid – I’ve received horribly idiotic questions from all sorts of people over the years, and if your question is so dumb that I think it’d embarrass you, I won’t publish the comment and will respond privately via email.
Seriously, no matter how stupid you think your question might be, I’m sure I’ve seen worse, so don’t be afraid to ask whatever you want.
As News Emerges…
Whenever more details about this lawsuit, the eventual settlement (I’m sure they’ll reach one), and the actual benefits getting sent back to consumers are announced, I will be sure to update this page. For your part, if you spot anything that I haven’t yet covered which is mentioned elsewhere (on any media source, including websites and forums), then please let me know what I’ve missed.
I would like to keep this page fully updated, as useful and helpful as possible, and hopefully, it’ll help me accomplish my original objective for creating this website (getting people OUT of student loans!).
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 in the Comments section below.
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.