Navient Busted Herding Student Loan Borrowers Into Default

Navient Busted Herding Student Loan Borrowers Into Default Then Using The Federal Government To Shake Them Down For Money

Navient Corporation is the largest student loan servicer working under contract for Sallie Mae and the Department of Education. The servicer is also the most disorganized and the hardest to get information from. Their level of inept management rivals that of the mortgage servicers in the early days of the financial crisis.

The loan servicer is also the most disorganized and the hardest to get information from. Their level of inept management rivals that of the mortgage servicers in the early days of the financial crisis.

They are also taking a play from what mortgage servicers did at the peak of the foreclosure crisis. Navient is herding borrowers into default and then charging them crippling late fees and outrageous interest charges.

CFPB Files Suit Against Navient

The CFPB filed suit against the servicer in January. The agency received tens of thousands of borrowers and co-signers filed complaints against Navient. The agency alleged Navient systematically cheated customers by not fully informing them of their repayment options.

The CFPB also alleged that the servicer guided borrowers into forbearance or deferment programs that benefited the company.

The CFPB alleges Navient’s conduct of pushing distressed debtors into forbearance agreements violated a federal law banning “abusive” practice

The servicer would set the borrower up with an income-based repayment plan.

State attorneys general in Washington and Illinois also filed similar lawsuits against the company.

The CFPB claims Navient added $4 billion to outstanding student loan debt by placing 1.5 million borrowers into forbearance agreements.

The company’s lawyers argued in the suit that borrowers can’t reasonably rely on Navient to counsel them about their many options because its primary role is, after all, to collect their payments:

There is no expectation that the servicer will act in the interest of the consumer.

The company also stated:

(It) didn’t agree to pay for the level of customer service the CFPB wants.

This is the opposite of what Navient CEO Jack Remondi says in public statements and his Medium blog. Remondi touts the company’s devotion to helping Americans cope with student debt:

At Navient, our priority is to help each of our 12 million customers successfully manage their loans in a way that works for their individual circumstances.

Navient Uses The IRS As A Collection Agent

Lakisha Johnson took out two student loans $6,625 in 2006 in hopes of becoming a medical assistant.

She soon found herself falling behind on her payments. Johnson wasn’t too concerned about her balance because Navient would enroll her into one of the forbearance plans they promoted in a continuous stream of emails.

She received an email on October 4, 2011, stating:

You may be able to qualify for a deferment or forbearance, which can postpone your loan payments and keep your loan from going into default.

Lakisha Johnson and her 12-year-old daughter found themselves in a homeless shelter just before Thanksgiving when Johnson’s landlord jacked up their rent from $675 to $875.

Johnson only planned on staying in the shelter until April when she expected to receive her tax refund of $8,220.

The check never came.

The IRS agent told her the Department of Education (DOE) was “holding back” the $8,220 refund to recoup some of her student loan debt. The agent told Johnson to expect the same thing next year. Johnson was unaware her debt had now ballooned to over $17,000.

Johnson was only now learning that those plans didn’t stop interest and fees from piling up. And she was now in default, prompting the DOE to move to collect.

That was only the half of it. Until contacted by Reuters, Johnson didn’t realize that she could have avoided the entire ordeal by enrolling in one of the government’s income-based repayment plans — an option she said Navient never discussed with her. Most of these plans allow for monthly payments as low as zero and forgive any remaining debt after 20 years.

Also, see:

Call In The Samurai Of Student Loan Debt Collection Defense