Navient, a servicer of loans, settled six lawsuits from different government entities. These cases began in 2017 and have been long debated in court. The US Consumer Financial Protection Bureau and several other states filed cases against Navient. The company allegedly misappropriated funds and made it difficult for borrowers.
According to the Navient lawsuit, Navient has misallocated many payments as early as January 2010. The accusations also include the following:
- Lack of clear information that prevented borrowers from accessing income-driven repayment plans
- Purposefully steered borrowers towards forbearances rather than help them
Navient has denied the claims to be true. According to them, the accusations happened because of recent changes applied retroactively. These were now making them the target of scrutiny. The issues have caused Navient’s contract with the government to expire last 2021, meaning they can no longer handle any federal loans.
The Navient Settlement
The lawsuit was extended because of Navient’s unwillingness and the allegations from the plaintiffs. The court dismissed most allegations because of a lack of proof or detail. However, the lawsuit affected Navient’s reputation and caused them to bleed money. In the end, they agreed to the following terms:
- Paying $15,000 to ten of the plaintiffs
- Pay $1.75 million to establish an independent organization. This organization will educate people about the Public Service Loan Forgiveness (PSLF) program.
- Create a standard template for borrowers who want to learn about public service loan forgiveness.
- Train and monitor their customer service to ensure they are educating borrowers about PSLF
What Does This Mean?
The lawsuit settlement bodes well for those under Navient student loans. The government will assure they will be doing a better job helping their borrowers. If you’ve dealt with any unresolved problems, this should be the time to talk to them as they are eager to be of a better image to the public.
If you find further resistance, you can file complaints. The CFPB is now responsible for overseeing Navient’s actions moving forward.
If you are uncomfortable with having Navient as your servicer, you can find ways to switch. The most common way would be to refinance a student loan, but it has pros and cons.
Most of their federal loans are moving to other services. It isn’t likely for Direct Loan borrowers to deal with Navient for the foreseeable future.
Always Have a Backup Plan
While Navient is still a service that's informing their borrowers, it does not mean that they are fiduciaries. They are still a company that’s out to make money first. That’s why it’s best to connect with organizations that can help. Whether it’s a lawyer or someone within the Department of Education, their word can go a long way to help you.