Crippling student loan debt was a hot topic this past election cycle, so much so that it helped spark discussions about “reigning in college costs.” Considering the fact that the total outstanding student loan debt in the United States clocks in at more than $1.4 trillion, reigning in costs would be a great idea, as would solutions to help make student loan payments a bit more bearable for borrowers who are struggling month to month in order to make their payments. The student loan debt crisis isn’t new, though. It’s been gaining attention for years. What is new, however, is news that one of the nation’s largest servicer of student loans, Navient, has been misleading student loan borrowers and making “serious mistakes at nearly every step of the collections process” and “illegally driving up loan repayment costs for millions of borrowers” for years, according to lawsuits filed recently “by a federal regulator and two state attorneys general.”
Crippling student loan debt was a hot topic this past election cycle, so much so that it helped spark discussions about “reigning in college costs.” Considering the fact that the total outstanding student loan debt in the United States clocks in at more than $1.4 trillion, reigning in costs would be a great idea, as would solutions to help make student loan payments a bit more bearable for borrowers who are struggling month to month in order to make their payments. The student loan debt crisis isn’t new, though. It’s been gaining attention for years. What is new, however, is news that one of the nation’s largest servicers of student loans, Navient, has been misleading student loan borrowers and making “serious mistakes at nearly every step of the collections process” and “illegally driving up loan repayment costs for millions of borrowers” for years, according to lawsuits filed recently “by a federal regulator and two state attorneys general.”
For those who don’t know, Navient deals with about “$300 billion in private and federal loans for some 12 million people.” That translates to about one in four student loan borrowers. While the company doesn’t actually make loans, it does hold the “lucrative contracts to collect payments each month on behalf of banks, government, and other lenders.” What has them under fire at the moment are reports that they’ve routinely “mishandled loan payments, buried critical information in fine print and set obstacles for borrowers trying to release co-signers from their loans, among other failings.”
Essentially, the company is being accused of “deliberately steering borrowers” away from repayment plans, such as income-based plans, that could have resulted in lower loan costs. Why? Because Navient wanted to maximize their own profits, simple as that. After all, signing borrowers up for income-based and other affordable plans is time-consuming, which doesn’t align well with Navient’s compensation system for its customer service representatives that essentially encourages them to process cash-strapped customers through the system as fast as possible instead of trying to help them find an affordable repayment plan.
Fortunately for student loan borrowers, the damages being sought “could reach billions of dollars,” according to Illinois Attorney General, Lisa Madigan. However, despite all of the allegations, Navient intends to fight the lawsuit and is denying all wrongdoing. Additionally, representatives of Navient, such as Patricia Nash Christel, have said “the allegations of the Consumer Financial Protection Bureau are unfounded, and the timing of this lawsuit — midnight action filed on the eve of a new administration — reflects their political motivations. We will vigorously defend against these false allegations.”
With such a high-profile lawsuit in the works, the issue of student loans is sure to be in the news for awhile, and rightly so. In fact, many would argue that it’s long overdue for something to be done about the student debt crisis. For years “regulators and consumer groups have complained about the widespread abuses in the student loan market.” The fact that student loan debt now surpasses credit card and auto loan debt is another alarm bell going off, demanding that public and government officials pay attention to the growing issue that is wreaking havoc on the lives of students and graduates across the country.
But just how big of a problem is student loan debt? Are student loan borrowers really struggling that much because of it? Well, yes. In fact, according to a recent survey by American Student Assistance (ASA), “the mere existence of the debt is a burden that is impacting the way student borrowers make important lifestyle decisions.” The survey found that “those with student debt are delaying decisions to buy a home, get married, have children, save for retirement, and enter a desired career field because of their debt.” This could have devastating impacts on the future of our economy because “the generation charged with investing in the nation’s future is delaying their lives because of student debt.” That being said, perhaps this lawsuit against Navient will begin a domino effect of changes to how our country handles student loan debt going forward.
Sources:
Life Delayed: The Impact of Student Debt on the Daily Lives of Young Americans
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