Navient Corp., which services more than 12 million student loan borrowers nationally, is under fire again — this time from a lawsuit filed by Pennsylvania Attorney General Josh Shapiro.
Shapiro contends that Navient engaged in unfair and deceptive practices to bilk student loan borrowers out of billions of dollars. For its part, Navient denies the allegations, insisting that it works within the confines of regulation set by Department of Education.
Why is Navient being sued?
Shapiro claims Navient engaged in practices designed to maximize profits while hurting consumers.
The Pennsylvania lawsuit is similar to the lawsuits filed earlier this year by attorneys general in Illinois and Washington. The Consumer Financial Protection Bureau (CFPB) also filed suit against Navient earlier this year.
The Pennsylvania attorney general makes three main claims in the lawsuit, which was filed in Pennsylvania Middle District Court:
- Navient made predatory loans to students attending schools with graduation rates of less than 50 percent, expecting students wouldn’t be able to repay their loans.
- Navient used a “baited hook” with subprime loans to become a preferred lender for many schools and increase its volume, even though it knew subprime student loan borrowers would likely default.
- After the implementation of income-driven repayment (IDR), Navient knowingly steered borrowers toward forbearance instead of counseling them about more affordable repayment plans.
“Navient’s deceptive practices and predatory conduct harmed student borrowers and put their own profits ahead of the interests of millions of families across our country who are struggling to repay student loans,” Shaprio said. “They crossed the line in pursuit of profit, and we’re here to change their behavior and help the people who’ve been harmed.”
Shapiro’s office seeks full restitution for borrowers affected by Navient’s practices and asks the company to give up profits made by the practices Shapiro says are unlawful.
The suit also asks Navient to delete negative credit information it gave to credit reporting agencies as a result of the disputed loans and to reform all affected loan agreements with Pennsylvania residents.
Navient fired back at the Pennsylvania attorney general in a press release: “The allegations are completely unfounded, and the case was filed without any review of Pennsylvania residents’ customer accounts.”
The company went on to insist that it abides by the rules set by Congress and the Department of Education when dealing with borrowers.
It also claimed that Navient-serviced borrowers are 37 percent less likely to default than those serviced by others and that 49 percent of the loans it services for the government are enrolled in IDR plans.
Could the Navient lawsuit in Pennsylvania have national impact?
Even though the Pennsylvania lawsuit against Navient isn’t breaking new ground, Adam Minsky, a student loan lawyer, said the outcome of this case could have nationwide impact.
“This third lawsuit against Navient from a state attorney general is an indication that states are ready to step in to defend consumers,” he said. “As the Department of Education rolls back consumer protections, we will probably see more states try to protect their citizens against the predatory practices.”
Navient isn’t the only student loan servicer in the crosshairs. Minsky pointed to other actions taken by states, including the lawsuit Massachusetts Attorney General Maura Healey filed against the Pennsylvania Higher Education Assistance Agency.
He also said Pennsylvania is of special interest because three of the five major servicers are based in the state. “If Pennsylvania is successful, lenders would have to change their behavior in ways that could benefit borrowers all over the country,” he pointed out.
The Pennsylvania lawsuit also sheds more light on the work of the CFPB. Minsky said Shapiro cited the more than 1,000 complaints Pennsylvania residents had lodged with the CFPB about Navient’s practices.
“Other states can access that data too and see if student loan borrowers are being negatively impacted by loan servicers,” Minksy said. “Who knows what’s next for the CFPB when the current director’s term is up and with some members of Congress attacking the independent agency?”
He thinks more of these suits could serve as insurance of sorts for the CFPB, drumming up public support for its work.
What can you do if you’re concerned about your student loan servicer?
Minsky said these actions by states and the CFPB aren’t class-action lawsuits, so you can’t sign up join them. However, there are ways you can take action if you think your student loan servicer isn’t giving you a fair shake.
Next, Minsky suggested, file a complaint with the attorney general’s office in your state. You also can file a complaint with the Department of Education. However, with the Department of Education no longer sharing its data with the CFPB, you might need to file separate complaints.
Finally, Minsky said you can go straight to your servicer. However, you should be careful when you do so.
“To be brutally honest, there’s a decent chance the servicer won’t give you the information you need or that you will even get misinformation,” he said. “Understand what you’re eligible for, know your options, and then talk to the servicer. You’ll be better equipped to to deal with the situation.”
Minsky also recommended being persistent with your servicer and asking to escalate to supervisors who can help you. “Keep records of everything,” he advised. “Note all your conversations, keep all your payment histories, and file any disputes in writing as well as over the phone.”
You also can get help from a student loan ombudsman to work through issues with your servicer.
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1 Important Disclosures for SoFi.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.50% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.49% APR (with Auto Pay) to 7.27% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 17, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/17/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.
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3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.48% effective April 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.49% – 7.27%1||Undergrad & Graduate|
|2.49% – 6.65%3||Undergrad & Graduate|
|2.49% – 7.41%4||Undergrad & Graduate|
|2.50% – 6.65%2||Undergrad & Graduate|
|2.49% – 7.11%5||Undergrad & Graduate|
|2.98% – 9.72%6||Undergrad & Graduate|