Navient’s facing lawsuits and demands from a range of individuals and organizations, all accusing the company of servicing loans with extreme greed.
Student loan service Navient is beset by lawsuits, several of which accuse the company of ripping off borrowers by ignoring legal proceedings and levying illegal fees.
Since 2017, some 30,000 student loan borrowers are suing lender Navient for pursuing payments even after their debt was discharged by bankruptcy.
The case, however, isn’t especially straightforward. Yahoo! News notes that Navient refused to recognize discharged loans largely because there was uncertainty as to which kinds of student loans could be discharged by bankruptcy.
“We began these cases in 2016 at a time when there was some confusion in the law regarding what types of student loans couldn’t be erased in bankruptcy,” said attorney Austin Smith, who’s representing multiple plaintiffs in the class action against Navient. “Since that time, more than a dozen courts across the country have agreed with us that these types of student loans are dischargeable and rejected Navient’s increasingly irrational arguments that have sought to prolong and delay this process.”
Smith says she and her colleagues want Navient to stop collecting—and stop attempting to collect—discharged loans.
Furthermore, the class wants Navient to provide recompense for payments it took from borrowers who’d already had their debts discharged.
“We have tried informally to get Navient to stop, and they have refused to stop,” Smith added. “And Navient refuses to stop because it believes that the profit to be earned today exceeds whatever nominal penalty is imposed tomorrow for violating the law. We are now asking the court to make Navient stop, and stop now.”
Yahoo! News notes that, if successful, the lawsuit could win relief for 30,000 class members as well as up to a half-million other borrowers who are facing harassment from other lenders.
Navient, though, has a long history of engaging in deceptive business practices. Another lawsuit, filed on Friday, accuses Navient of predatory overcharging. There, the lead plaintiff—named as Miguel Rivera by Forbes.com—recounts how he was enrolled in an Income Based Repayment plan, or IBR.
Under IBR, enrollees who make less than 150% of the federal poverty limit for their household size are not required to make any loan payments.
In his suit, Rivera notes that he was intermittently homeless, surviving on a meager income. Because he often earned next to nothing from one month to the next, he qualified for IBR’s poverty exemption.
But on Rivera’s next bill, he found a $23.39 fee. Rivera paid it, thinking it was the amount he owed on his income-based repayment plan. In reality, though, that $23.39 was a late fee for a payment Rivera had earlier missed.
Instead of applying Rivera’s payment to the late fee, Navient automatically routed it to Rivera’s loan interest. So, one month to the next, the same late fee kept appearing on Rivera’s invoice, and Rivera kept paying it because he thought it was part of his bill.
In total, Rivera says he made $1,100 in payments he wasn’t legally required to make.
Navient’s history of cheating borrowers has also attracted attention from the federal government. In late January, Massachusetts senator and Democratic presidential contender Elizabeth Warren alleged that Navient owes the government $22.3 million, having claimed special allowance payments and subsidies for ineligible student loans.