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> Posted by Carmen Paraison, Project Associate, the Smart Campaign
On January 18th, 2017, the Consumer Financial Protection Bureau (CFPB) filed suit against Navient, the largest federal and private student loans servicer in the U.S., for “systemically and illegally failing borrowers at every stage of repayment.” Allegations include:
- Misallocating student loan payments by failing to follow instructions from borrowers about how to apply their payments across their multiple loans.
- Steering struggling borrowers toward multiple forbearances instead of lower payments via income-driven repayment plans. (Forbearance is an option that lets borrowers take a short break from making payments, but that still accrues interest.)
- Providing unclear information about how to re-enroll in income-driven repayment plans.
- Deceiving private student loan borrowers about requirements to release their co-signer (e.g. a parent or grandparent) from their loans, which can be advantageous given some lenders’ practices surrounding the death of a co-signer.
- And failing to act when borrowers complained.
Navient currently services more than $300 billion in loans for more than 12 million borrowers.