Tag: Navient

student loan debt, Student Loans

Navient Student Loan Settlement Focuses on Delinquent Borrowers

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A settlement has been reached as of January 13, 2022, involving student loan servicing company, Navient, and approximately 400,000 student loan borrowers. This settlement provides some much-needed debt relief to hundreds of thousands of delinquent borrowers.

The lawsuit alleges that Navient encouraged student loan borrowers who were behind on their loan payments to enter into costly long-term forbearance programs that kept them in debt. Additionally, borrowers alleged that Navient likewise encouraged them to take on private loans which the borrowers were not able to pay back. To hold the loan servicing company accountable, lawsuits were filed by several states and were joined by 39 attorneys general.

The settlement specifically focuses on student borrowers who took out loans to attend for-profit colleges between the years 2002 and 2014. In the settlement, Navient said they will cancel $1.7 billion in private student loan debt for approximately 66,000 borrowers. In addition, they said they would pay $95 million in restitution for 350,000 federal student loan borrowers.

The goal of this settlement and the reason behind the lawsuit is to prevent predatory lending practices is accused of doing to borrowers.  The lawsuit claimed that Navient encouraged borrowers who were not able to make their loan payments to enter forbearance programs instead of income-drive repayment plans. While forbearance programs do help borrowers in a temporary bind, they end up being much costlier in the long run and can often push the borrower even deeper into debt. Investigations into Navient practices found that employees in the call center were pushed to recommend borrowers go into forbearance programs instead of recommending programs that would be much better for the borrower’s financial situation.

Another predatory practice found through investigations into Navient’s practices involved pushing borrowers to apply for subprime private student loans even knowing that the borrowers had low credit and a high likelihood that they would not be able to repay the private loans.  Most students who took out these private loans were attending for-profit institutions. However, under federal law, school tuition payments must be at least 90 percent federally funded, therefore making the schools more dependent on federal funding instead of private.

Navient adamantly denied the claims in the lawsuit. They stated the settlement was entered into to avoid financial burden and time in litigation.

Borrowers who are eligible for debt cancellation under the settlement include those who took out private subprime student loans between 2002 and 2014. These loans were mostly taken out through Navient’s predecessor, Sallie Mae. Loan cancellation is available for borrowers who were behind on their private loan payments for at least seven consecutive months prior to June 30, 2021. If a borrower was current on his or her loan obligations, that person would not be eligible for cancellation.

In addition, borrowers who received a non-subprime private student loan to attend a for-profit educational institution listed specifically in the settlement, including DeVry University and University of Phoenix, are also eligible for debt cancellation.

Debt cancellation will be available for borrowers from 38 states and the Washington D. C., who took out federal loans through Navient and were in forbearance for at least two years between 2009 and 2017.

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For borrowers who are struggling with student loan debt, relief options are available.  Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

student loan debt, Student Loans

Navient Will No Longer Service Federal Student Loans- What This Means for Borrowers

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Navient has announced that it will no longer service federal student loans. The company is one of the largest servicers for the U.S. Department of Education. Navient has a massive $1.7 trillion oustanding in its student loan portfolio.

The decision leaves around 6 million borrowers waiting to be matched with a new lender.  With a transition of this magnititude, problems are likely to occur. Here are a few things borrowers should do now if their student loans are getting reassigned to another lender.

student loan debt, Student Loans

Beware of this Student Loan Debt Relief Scam in 2021

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Student loan borrowers look for ways to save on their loan payments, including having their loans forgiven. However, for the 10 million student loan borrowers who were part of the recent Navient settlement, they now find themselves at risk of falling prey to a new scam.  

This recent Navient settlement came as part of a student loan forgiveness lawsuit. Navient is one of the country’s largest student loan providers, and while the settlement does not necessarily affect how much each borrower owes, scammers are targeting borrowers, by offering false claims of debt forgiveness.  

student loan debt, Student Loans

Bankruptcy Court Discharges $200,000 in Private Student Loan Debt for Colorado Couple

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A major victory was scored for student loan borrowers after a U.S. Court of Appeals for the Tenth Circuit issued a ruling stating that a Colorado couple’s private student loan debt could be discharged in their personal bankruptcy case. The ruling allowed $200,000 of private student loan debt to be wiped out, breaking the long-standing stigma that student loan debt, particularly private student loan debt, is near impossible to discharge in a bankruptcy case.

The Colorado couple had taken out $200,000 in private student loans from Navient, one of the nation’s largest student loan issuers. The ruling comes after a similar bankruptcy case, where the borrower also had their student loan debt discharged. In that case, the loan servicer appealed the ruling.

Debt Relief, student loan debt, Student Loans

Recent Court Decision Sheds Light on the Deceptive Practices of Student Loan Service Providers

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A recent Seventh Circuit court ruling is providing hope to many student loan borrowers who are finding themselves in a difficult financial situation due to the heavy burden of their debt. The Seventh Circuit has ruled that a student loan servicer may be liable for damages caused as a result of their promises to advise student loan borrowers on how to handle their financial situations, directing them into plans that only benefit the lenders and hurt borrowers in the long run.

The case at the center of it all is Nelson v. Great Lakes Higher Education,  which was a case brought by student borrower, Nicole Nelson. Nelson paid for her college education through federal student loans, which she began repaying in 2009. However, she soon found herself in a tough situation when her income dropped due to a job change two years later.

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

What Student Loan Borrowers Need to Know about the Navient Lawsuits

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Several important legal cases are pending in federal courts, many of them naming student loan service provider, Navient, as a party to the case. In fact, the number of lawsuits made against federal student loan servicers has increased rapidly over the past few years.

Navient, along with federal student loan provider, Nelnet, have been named as parties in these lawsuits. Currently, the state attorneys general for the states of California, Illinois, Washington and Illinois have filed lawsuits against Navient. These lawsuits follow an earlier lawsuit filed by the Consumer Financial Protection Bureau (CFPB) in January 2017, which alleged that Navient had incorrectly processed student loan payments, which, in turn, kept borrowers who were struggling to meet their monthly payments from being able to make lower repayments.

These lawsuits have come at a time when faith is being lost in the current administration and its motivation to protect borrowers from lenders, like Navient, who they say take advantage of borrowers and their inability to make payments. The CFPB created the Office of Students and Young Consumers during the Obama administration as a way to protect the rights of borrowers, but recent moves by the Trump administration have taken this office and moved it into the larger Office of Financial Education. As a result of these controversial changes, the prior CFPB student loan ombudsman, Seth Frotman, resigned in protest. In his resignation letter, he accused the administration of changing the mission of the CFPB and failing to protect borrowers from predatory lending practices.

Now the state attorneys general offices feel that it is their responsibility to protect their constituents if the federal government refuses to do so, which has led to these recent lawsuits. These states have alleged similar grounds as were alleged in the CFPB suit against Navient by saying that the company put borrowers into temporary forbearances on their loans when they should have worked with them on signing them up for income-based repayment plans.

Forbearance suspends borrowers’ monthly payments but keeps the interest accruing in the interim.  Even taking off just a few months from making payments on the loan, can add hundreds even thousands of dollars to the balance due to interest.  Therefore, once the forbearance period ends, which is meant to be a temporary period of time, the borrower will owe substantially more than he or she did at the start due to the interest rates running during the forbearance.

These states argue that the borrowers would have qualified for income-based repayment plans which would offer a lower monthly payment that they could arguably meet. These plans would have allowed them to stay up on their payments and not fall behind. In addition, making the monthly payments lower would make it easier for these borrowers to eventually be considered for loan discharge.

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For borrowers who are struggling with student loan debt, relief options are available.  Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Class Action Lawsuit Brings Hope to Student Loan Borrowers in Bankruptcy

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A Texas bankruptcy judge has denied a request by student loan giant, Navient, to dismiss a class-action lawsuit accusing the firm of illegally collecting on loans that were discharged in bankruptcy. The decision means the case can move forward and allow the opportunity for an appellate court to consider whether loans historically viewed as exempt from bankruptcy can be discharged.

The ruling is an important one, as the Department of Education is currently reviewing the high standard student loan borrowers must meet to have their student loan debt discharged in bankruptcy.  The case in question focuses on a specific type of private loan debt (i.e. – money loaned to borrowers to pay for unaccredited programs, such as bar exam study courses and K-12 educational expenses).  However, if the appellate court rules in favor of the plaintiffs, it could mean that borrowers with similar student loans from other companies could qualify for the same relief.

Before this ruling, bankruptcy courts have determined that the types of loans in question in this case cannot be discharged because they were received as an “educational benefit.”  Recently however, lawyers and judges have started to challenge whether loans to help borrowers study for the bar exam and other similar debts truly fit into the category.

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Class Action Lawsuit May Offer Hope to Student Loan Borrowers in Bankruptcy

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Student loan servicer, Navient has agreed to stop collection attempts on certain borrowers who filed for bankruptcy, providing at least temporary relief for thousands of people and signaling there may be a chance of discharging student loan debt in bankruptcy.

As part of an ongoing class-action lawsuit, Navient has voluntarily agreed to stop collection activities on loans used by borrowers who filed for bankruptcy after October 2005 and used the loans to attend non-accredited schools.

Under the voluntary agreement filed with the court this month, Navient can still continue to send borrowers monthly statements, but the company will no longer aggressively call borrowers multiple times a day.

Plaintiffs in the case allege Navient attempted to collect on loans that were discharged in bankruptcy, including calling their relatives and employers multiple times a day.

The judge overseeing the class-action has not made a ruling yet, so it is unclear if he believes the debts should be discharged. But in a hearing to discuss whether Navient would stop collection on the loans at issue in the case, he pushed the company to do so, expressing sympathy for the borrowers.

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Debt Relief, Student Loans, Timothy Kingcade Posts

Student Loans ‘Designed to Fail’: States Say Navient Preyed on Students

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Navient, a student loan lender that split off from Sallie Mae in 2014, retained nearly all of the company’s loan portfolio. In recent months, Navient has come under fire for aggressive and sloppy loan collection practices, leading the government to file multiple lawsuits against the student loan giant in January.

However, those accusations have overshadowed broader claims made against the lender. Two separate states, Illinois and Washington, have filed lawsuits against Sallie Mae claiming that it engaged in predatory lending, extending billions of dollars in private loans to students.

“These loans were designed to fail,” said Shannon Smith, chief of the consumer protection division at the Washington State attorney general’s office.

New details emerged last month in the lawsuits against Navient that shed light on how Sallie Mae used private subprime loans, some of which it expected to default at rates as high as 92 percent, as a tool to build its business relationships with colleges and universities across the company.

The risky loans were detrimental for students, however; they were beneficial for Sallie Mae. The private loans were a “baited hook” as Sallie Mae described it. The lender used the private loans to reel in more federally guaranteed loans, according to the lawsuit.

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Credit, Debt Relief, Student Loans, Timothy Kingcade Posts

What the Navient Lawsuit Means for Your Student Loans

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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.

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.