The Washington state Attorney General filed a lawsuit against student loan company, Navient on Wednesday. Navient is formerly part of the private student loan company, Sallie Mae. In a separate lawsuit, Illinois Attorneys General named both Navient and Sallie Mae.
According to Richard Cordray, the director of the Consumer Financial Protection Bureau (CFPB), “At every stage of repayment, Navient chose to shortcut and deceive consumers to save on operating costs.”
Navient separated from Sallie Mae in 2014 and is currently the largest student loan servicer in the country. The company reportedly handles more than 12 million student loan accounts. Approximately half of the borrowers have federal loans and the other half are private. According to the CFPB, one in four student loan borrowers have Navient as their servicer.
The CFPB’s allegations claim that Navient steered struggling borrowers toward paying more than they had to, and misallocated borrowers’ payments when they were made across multiple loans. It also alleges that in some cases, Navient erroneously reported borrowers had defaulted on their loans, damaging their credit score.
In the lawsuit, the government claims that Navient also made it more difficult for borrowers to enroll in an income-driven repayment plan, which can be used to lower their monthly payment if they’re struggling to make payments.
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