Laws
Navient Lawsuit Settlement

Navient Lawsuit Settlement

The representative plaintiff filed a Navient lawsuit after she learned that her brother’s student loan account had been placed in the company’s collection department. Her brother’s account was under Navient’s collection department when she was listed as a reference. The representative plaintiff never provided her consent to Navient to call him, and the company continued to call third parties even after she asked not to be contacted anymore. This practice is illegal and may have impacted the representative plaintiff’s credit rating.

Navient’s predatory subprime private loans

The California attorney general filed a lawsuit against Navient in June 2018. The lawsuit charges that Navient acted illegally by deceiving borrowers to enter into forbearance programs, which resulted in borrowers’ debt increasing substantially. Moreover, Navient misled borrowers about the benefits of income-driven repayment plans. It also violated California’s Unfair Competition Law.

The plaintiffs’ lawsuit claims that Navient steered students into unaffordable, subprime private loans. The plaintiffs allege that Navient discouraged borrowers from enrolling in income-driven repayment plans and put them into loan forbearance programs, which were more expensive and prevented them from paying down their principal. As a result, the borrowers accumulated more debt and interest payments than they were capable of repaying.

The Navient settlement also addresses consumer bureau charges that the company inflated borrowers’ bills and steered federal loan borrowers into costly long-term forbearance. The settlement also includes $145 million to participating states. However, the plaintiffs’ lawsuit does not cover loans made after the eligibility period, which is 2002 to 2010.

Violations of the Telephone Consumer Protection Act

In a recent settlement, Navient, which was formerly known as Sallie Mae, agreed to pay $2.5 million to settle claims that it violated federal law. The company used automated dialers to attempt to collect a debt from consumers who did not give consent. They were also accused of repeatedly auto-dialing third parties without their consent. The lawsuit cites several other violations, including knowingly violating the TCPA.

In the course of the litigation, a judge in King County, Washington, ruled that Navient had violated the Consumer Protection Act. The complaint against Navient details numerous instances where the company misapplied loan payments and provided false and incorrect information to consumers. The companies erroneously informed borrowers about the process of releasing co-signers, how much they owed on delinquent loans, and whether they could file for bankruptcy. Navient also erroneously reported that disabled borrowers had defaulted on loans.

Misrepresentations about loan forgiveness programs

Despite the high-profile misrepresentations of loan forgiveness programs, the Navient lawsuit settlement only covers a fraction of the company’s student loan debt. While the settlement covers a fraction of the company’s debt, the lawsuit also highlights how Navient’s loan forgiveness programs prevented borrowers from paying down their principal balances, causing many borrowers to end up with even more debt and interest.

The CFPB alleges that Navient incentivized employees to encourage borrowers to apply for forbearance, which is not the same as an income-driven repayment plan. Forbearance would also add interest to the principal balance, despite borrowers’ best intentions. As a result, this practice contributed to more than $4 billion in interest charges for borrowers.

Under the settlement, Navient must give borrowers accurate information about how to qualify for loan forgiveness programs. The settlement requires the company to notify borrowers about the limited PSLF waiver opportunity, which offers loan forgiveness for qualifying public servants, file their employment certifications, and consolidate into the Direct Loan Program by October 31, 2022. It also requires the company to send postcards to borrowers who are eligible to receive this loan forgiveness.

Class-action lawsuits against Navient

If you are having trouble making payments on your Navient loans, you may be eligible to file a class-action lawsuit. Navient is a private third-party company that services both federal and private student loans. Navient has been accused of deceiving students and borrowers to secure loans that were too expensive to repay. This conduct has resulted in class-action lawsuits against Navient. However, there are ways to avoid becoming a victim of Navient’s practices.

Students in Washington have filed a class-action lawsuit against Navient, claiming that the company enrolled them in forbearance when they were not eligible. This practice was unfair and resulted in long-term harm for most borrowers. Forbearance allows borrowers to suspend payments for a specified period and accumulated interest would be applied to the loan principal when repayment resumed. Income-driven repayment plans offer borrowers valuable interest subsidies, which can be as low as zero per month.

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