Navient, a company that derived from Sallie Mae, has more than 12 million customers and services more than $300 billion of government and private student loans. In January, a lawsuit was filed against the student loan lender where the Consumer Financial Protection Bureau (CFPB) alleged that Navient “systematically and illegally failed borrowers at every stage of payment,” in many ways such as:
- Creating obstacles to repayment by providing bad information
- Processing payments incorrectly
- Failing to act when borrowers complained
- Illegally cheating many struggling borrowers out of their rights to lower payments, which caused them to overpay for their student loans
- Deceiving private student loan borrowers about requirements to release their co-signer from the loan
- Harming the credit of disabled borrowers, including severely injured veterans
According to the CFPB, Navient also improperly directed borrowers into forbearance when these borrowers otherwise might have qualified for income-based repayment plans. The lender also failed to keep borrowers in income-based repayment plans informed of deadlines to maintain their eligibility under such plans.
Navient later denied all allegations and claimed the lawsuit was politically motivated. The company filed a motion to dismiss the lawsuit on March 24th, claiming there have been no violations of actual servicing rules.
Does your student loan servicer owe you a fiduciary duty?
According to Navient, it is not a fiduciary financial advisor. The student loan lender claims that courts “routinely hold that servicers and lenders do not owe borrowers any specific fiduciary duties based upon their servicer/borrower relationship.”
This means that if you need guidance in choosing a repayment plan, Navient maintains that the lender is not responsible for counseling borrowers on alternative repayment plans. Navient further notes that the U.S. Department of Education does not pay Navient enough to provide sufficient customer service that the CFPB would like Navient to provide.
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