Student Loan Servicer Navient Faces California Lawsuit

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

california attorney general xavier becerra
Logo

We’ve got your back! Student Loan Hero is a completely free website 100% focused on helping student loan borrowers get the answers they need. Read more

How do we make money? It’s actually pretty simple. If you choose to check out and become a customer of any of the loan providers featured on our site, we get compensated for sending you their way. This helps pay for our amazing staff of writers (many of which are paying back student loans of their own!).

Bottom line: We’re here for you. So please learn all you can, email us with any questions, and feel free to visit or not visit any of the loan providers on our site. Read less

California Attorney General Xavier Becerra announced Thursday that the state will file a lawsuit against Navient, one of the largest student loan servicers in the U.S., accusing it of unlawful business practices, including causing borrowers to overpay on federal student loans.

The move makes California the fourth state to sue Navient, which services student loans for more than 12 million borrowers. The company also faces action from the Consumer Financial Protection Bureau (CFPB).

What is Navient accused of?

Navient, which services both federal and private student loans, is one of eight companies entrusted by the U.S. Department of Education to collect payments on government-issued student loans.

California’s lawsuit echoes serious issues raised in a January 2017 suit by the CFPB, a federal agency created to fight financial abuses, as well as complaints made by Illinois, Pennsylvania, and Washington.

These states and the CFPB allege that Navient:

  • Inappropriately advised borrowers to put loans into forbearance (pausing payments but not interest), which resulted in total loan balances increasing, since interest continues to accrue
  • Improperly steered borrowers away from income-driven repayment plans (which can cut their monthly payments based on how much money they make), even when many of the borrowers would have qualified to pay nothing
  • Failed to properly alert borrowers in income-based repayment plans that they needed to re-enroll after 12 months so that payments didn’t go up
  • Improperly processed payments by ignoring borrower instructions to apply their money toward specific loans, instead of distributing payments among all outstanding loans
  • Created obstacles to cosigner release (in which a cosigner’s name is taken off the loan), including making it more difficult to meet requirements that borrowers make 12 consecutive repayments
  • Misled borrowers about what happens when those in default take steps to rehabilitate their loans
  • Improperly reported that disabled borrowers had defaulted on their loans instead of having loans discharged

Illinois, Washington, and Pennsylvania also claimed that Navient gave private student loans to borrowers who weren’t qualified and who were likely to default. Illinois Attorney General Lisa Madigan described the loans as “designed to fail.”

Borrowers filed a class action suit in federal court in Florida alleging Navient misled them about qualifying for Public Service Loan Forgiveness (PSLF), which would result in student debt being forgiven for eligible borrowers after 120 on-time payments.

California and the three other states, along with CFPB, are seeking remedies that include loan forgiveness, reimbursement of overpayments, and other debt relief for borrowers. Navient has tried to get these cases dismissed, but the judges who’ve ruled on the issue so far have rejected the company’s requests.

Navient said it would fight the allegations made by California, calling them “unfounded,” according to The New York Times.

What should borrowers do?

Student loan borrowers who have loans serviced by Navient must continue to make their payments while the lawsuits play out in court.

However, here are some steps you should take to protect yourself.

It also is a good idea to monitor how these lawsuits unfold, as you may become qualified for remedies through a settlement or court verdict against Navient.

Interested in refinancing student loans?

Here are the top 6 lenders of 2018!
LenderRates (APR)Eligible Degrees 
Get real rates from up to 4 Lenders at once


Check out the testimonials and our in-depth reviews!
2.57% – 6.32%Undergrad
& Graduate
Visit Earnest
2.80% – 7.02%Undergrad
& Graduate
Visit Laurel Road
2.51% – 7.80%Undergrad
& Graduate
Visit SoFi
2.76% – 8.54%Undergrad
& Graduate
Visit Lendkey
2.57% – 6.65%Undergrad
& Graduate
Visit CommonBond
2.75% – 8.69%Undergrad
& Graduate
Visit Citizens
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.