What Student Loan Borrowers Should Know About Navient’s Lawsuits | Ranger student loan
Federal student loan services, such as Nelnet and Navient Corp., are companies that collect payments, respond to customer service inquiries, and perform other administrative tasks on behalf of the US Department of Education.
The state attorneys general of California, Pennsylvania, Illinois and Washington have filed lawsuits against Navient, one of the most important of these services.
The recent chain of lawsuits builds on an earlier lawsuit filed by the Consumer Financial Protection Bureau in January 2017. CFPB alleges Navient mishandled student loan payments and prevented distressed borrowers from making repayments lower.
Readers often send Student Loan Ranger questions about these lawsuits and what they might mean for their outstanding student debt. Here are some tips for student loan borrowers to consider.
Understand why states are suing Navient. As Federal Student Loans Services Are Hired By The Department Of Education To Handle Borrower Communications And Federal Student Loan Payments, Consumer Advocates Say Agency Is Not Doing Enough To Protect Borrowers .
Under the Trump administration, the CFPB moved its Office of Students and Young Consumers – a unit that had taken aggressive action to regulate student loan services – to the Office of Financial Education.
Most recently, CFPB Student Loans Ombudsman, Seth Frotman, resigned in protest, stating in his resignation letter: “By undermining the Bureau’s own authority to monitor the student loan market, the Bureau has let down borrowers who depend on independent oversight to end bad practices and hold the lending industry accountable. students. “
The CFPB Student Office had previously published a number of useful resources for borrowers, such as example instructions to loan officers for the application of monthly payments.
In response to what they see as the federal government diverting resources from consumer protection, state attorneys general cite their responsibility to protect their constituents as the rationale for these new lawsuits.
Similar to the 2017 CFPB lawsuit against Navient, the California case and other lawsuits allege that the Delaware-based company inappropriately put borrowers on temporary bans instead of helping them register. income-based reimbursement plans.
When the borrower is in abstention, they don’t have to make monthly payments, but interest continues to accrue on their loans. Additionally, borrowers are still responsible for making skipped payments after forbearance has ended, or borrowers have exhausted their available forbearance period. Forbearance is intended as a temporary relief for borrowers facing short-term financial difficulties, such as the loss of a job or an unforeseen expense.
Attorneys General argue borrowers would be better off in income-oriented plans because monthly payments can be quite low. This way borrowers stay in the habit of making monthly payments and get closer to the number of payments required to qualify for a loan. loan receipt.
Navigate argues that the allegations in these lawsuits are unfounded and that the difficulties in selecting the most suitable repayment plan for each borrower are ultimately caused by the complexity of the federal student loan system, which includes several types of loans and repayment plans.
Meanwhile, the Education Department says that because student loans and service providers are regulated federally, states do not have the jurisdiction to oversee service providers.
Find out what student loan borrowers can do. Unfortunately, individual student borrowers are unable to join state attorneys general lawsuits against Navient. While waiting for the court system to resolve these disputes, student loan borrowers should take additional steps to ensure their officers follow their instructions and apply payments correctly.
If borrowers send extra money, for example, they should explicitly inform their service agent about how the extra amount is to be applied. Student borrowers should also take the time to learn the difference between deferrals, abstentions and repayment options on their federal loans.
With so many different types of loans and repayment plans, it’s easy to get lost or feel overwhelmed. If you would like to work with a certified nonprofit expert, the Student Loan Ranger recommends contacting a student loan advisor who can help you explore your options.