OAKLAND, CA – Yesterday, California Attorney General (AG) Xavier Becerra filed a lawsuit against Navient Corporation, the nation's largest student loan servicer and its subsidiaries for violations of the state's Unfair Competition and False Advertising Law. Approximately 1.5 million student loan borrowers in California could be affected by the litigation.
Specifically, the lawsuit charges that Navient:
- Steers vulnerable borrowers toward more expensive repayment plans;
- Fails to adequately disclose how students could access income-driven repayment certification;
- Misrepresents the order in which it applies overpayments;
- Misrepresents the "present amount due" to delinquent borrowers; and
- Fails to properly discharge the federal loans of borrowers with a total and permanent disability.
In response, Graciela Aponte-Diaz, California Policy Director with the Center for Responsible Lending issued the following statement:
"Across the country, America's 44 million student loan borrowers are struggling with repayments for a still-growing $1.5 trillion debt. No one seeking to improve their lives through higher education should be financially abused. California's lawsuit comes in addition to others, including one filed by the Consumer Financial Protection Bureau (CFPB).
"CFPB found that Navient's practices from January 2010 to March 2015 cost borrowers up to $4 billion in unnecessary interest by repeatedly enrolling borrowers in forbearance. The Bureau also found that many federal loan borrowers were unaware that the government could pay part of the interest charges on their loans when personal circumstances prevent borrowers from remaining current on their payments.
"Among Navient's most egregious offenses are those alleged against disabled military veterans. Consumers have a right to know that federal law provides student loan forgiveness to those who incurred their disabilities while in service to the country. According to the complaint, Navient never discharged these loans.
"Also on yesterday, news articles reported that top CFPB officials met with Jack Remondi, Navient’s CEO, who is pressuring the Bureau to drop its case.
“At a time when our nation’s chief consumer law enforcement officials are taking private meetings with the same student loan servicers they are suing, the actions of state Attorneys General plays a heightened role in this sphere of consumer lending.
“The Center for Responsible Lending applauds AG Becerra for standing with borrowers and their families, particularly when federal officials seem determined to stand with businesses instead of the people and their interests.”
For more information or to arrange an interview with a CRL spokesperson, please contact Charlene Crowell at email@example.com.