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Feds Sue Student Loan Servicer Navient for Deceptive Servicing

The Consumer Financial Protection Bureau (CFPB) has filed a federal lawsuit against one of the largest private and federal student loan servicing company, Navient Corp. The lawsuit alleges Navient of "systemically and illegally failing borrowers at every stage of repayment."

Basically, they are alleged to have regularly deceived borrowers into choosing higher cost options.

Navient's Deceptive servicing

According to the lawsuit, Navient deceived borrowers by:

  • Providing bad information
  • Misapplying payments
  • Creating systematic obstacles for borrowers to reduce their payments
  • Failing to respond to complaints
  • Reporting that veterans that had their loans forgiven had defaulted on their loans

Navient services over $300 billion in student loans, spread out amongst 12 million borrowers. A major issue with the above practices is that a majority of borrowers don't know how to identify the deceptive and illegal practices. The lawsuit alleges violations of the Dodd-Frank Act, Consumer Protection Act, Fair Credit Reporting Act, and Fair Debt Collections Practices Act.

What to Do If You Have Loans With Navient

If you have loans serviced by Navient, you may be wondering what steps you need to take to see if you've been cheated. If any of the above allegations sound like they might apply to you, you can file a complaint with the CFPB directly on their website.

If you are unsure, now might be a good time to dig into that stack of important documents you've been meaning to go through, organize, then file away, and do an audit. You can check for the following issues:

Misapplication of payments: If you had several loans, check your statements to make sure that your payments were applied properly to each loan. Navient would receive payments for multiple loans, then only apply the payments to some of the loans, which resulted in higher interest payments.

IBR or Forbearance: In 2009, Income Based Repayment plans were made available to borrowers. These plans capped student loan payments based on a percentage of a borrower's income, and can also qualify borrowers for loan forgiveness. If you would have benefited from such a plan and it was not made available or you were denied, you may have a claim.

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