WASHINGTON, D.C. - Unsealed court documents are shedding new light on student loan servicing company Navient and its practice of steering student loan borrowers into forbearance rather than helping them enroll in affordable income-base repayment plans (IBR). According to the documents, an internal memo outlining Navient’s predecessor’s forbearance strategy was: “forbear them, forbear them, make them relinquish the ball … said another way, we are very liberal with the use of forbearance once it is determined that a borrower cannot pay cash or utilize other entitlement programs.”
A federal court unsealed the documents, including the internal memo, as part of an ongoing suit against Navient by the Consumer Financial Protection Bureau (CFPB).
Under the previous CFPB Director, Richard Cordray, the agency 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.
Center for Responsible Lending Senior Policy Counsel Ashley Harrington released the following statement:
These documents support our repeated calls for robust standards and better enforcement at the federal and state level for student loan servicers. Navient has consistently failed to fulfill its obligation to students and taxpayers and has engaged in variety of abusive practices that have long-term consequences for borrowers. Student loan servicers, like Navient, are notorious for putting borrowers, particularly women borrowers and borrowers of color, into deferment or forbearance.
These practices have led to billions of dollars in extra interest and fees being added to the principal balances of already indebted student loan borrowers. They have also prevented borrowers from accessing affordable repayment plans that would allow them to take part in other wealth-building activities. Several states across the country have already taken a stand to protect borrowers from these kind of abusive practices, it’s time for the federal government, especially the Department of Education, to ensure more accountability and transparency for the servicers they contract with to handle student loans.
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