Wednesday, January 18, 2017

WA attorney general sues nation's largest student loan servicer

Posted By on Wed, Jan 18, 2017 at 3:56 PM

click to enlarge Washington Attorney General Bob Ferguson
Washington Attorney General Bob Ferguson

Washington Attorney General Bob Ferguson announced today that his office has filed a lawsuit against Navient, the nation's largest student loan servicer, in a case that could impact thousands of former or current Washington college students.

Ferguson accused Navient, formerly Sallie Mae, of "unfair and deceptive practices" in its student loan business. That includes predatory loans targeting students attending for-profit colleges that have low graduation rates, steering students toward short-term forbearances and engaging in aggressive and misleading collection tactics.

"We are not going to allow private entities to pad their bottom lines on the backs of struggling students," Ferguson said in a press conference today.

The lawsuit was filed in King County Superior Court and is the culmination of a multi-year investigation by Washington, Illinois and the federal Consumer Financial Protection Bureau. The CFPB filed its own lawsuit against Navient today as well, but Ferguson says his lawsuit is different because it's more focused on Washingtonians and covers Navient's practices prior to 2010, when it was still called Sallie Mae.

The lawsuit could impact anyone who received a private student loan from Sallie Mae prior to 2009 or anyone who experienced issues with their their loan currently served by Navient.

Among the allegations is that Navient encouraged borrowers into forbearances rather than encouraging borrowers struggling to make payments to apply for income-driven repayment plans. While that meant payments were suspended, the interest continued to accumulate and that left borrowers paying interested on top of already-existing interest.

The lawsuit alleges that Navient failed to inform borrowers who did choose income-driven repayment plans that they had to re-certify their income and family size every year. That forced borrowers with a hike in their monthly payments.

There are other troubling allegations. One borrower complained of getting harassed with collection calls for past due balances, even though the payments were on auto-pay and she in fact had been paying more than the amount due.

"Each time I call it has taken me over 30 minutes with them to allegedly resolve the issue, only to have it happen again the next month. I'm sick to death of dealing with these people when it's their error," the woman said.

And when Navient called delinquent borrowers, it tried to collect more than necessary, according to Ferguson.

"The issue of student loans, and the crushing debt that students have, and graduates have in our state, is significant," Ferguson says. "And it is compounded by entities like Navient who do not play by the rules and make life exceedingly difficult for those borrowers to do the simplest of tasks."

Read the full complaint below.

201701 Cfpb Navient Pioneer Credit Recovery Complaint by Wilson Criscione on Scribd

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About The Author

Wilson Criscione

Wilson Criscione, born and raised in Spokane, is an Inlander staff writer covering education and social services in the Inland Northwest.