Is there a lawsuit against Navient? The answer to that question depends on what you consider a predatory lending company. According to Consumer Financial Protection Bureau (CFPB) documents, Navient improperly capitalized interest on private student loans and steered payments to loans with lower interest rates. This resulted in borrowers with unaffordable debt and dimmer career prospects. The settlement only covers six thousand borrowers, but it still could affect hundreds of thousands of borrowers.
This settlement is the product of a lengthy and expensive legal battle.
In 2017, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Navient, claiming the company misled borrowers into signing up for long-term forbearances. These loans can cause borrowers to incur even more debt, as interest is still accruing. In addition, borrowers may be unaware that they could be paying more interest than they originally borrowed.
The federal government and millions of borrowers sued Navient for their deceptive practices. The CFPB claims that Navient misled borrowers in public service careers, and it tried to prevent them from transferring their loans to avoid losing associated fees. The company settled the case in June 2020 and will pay more than $1 billion to borrowers with federal student loans. It must also improve its training programs for its employees and donate $1.75 million to a nonprofit student loan counseling organization. The money will go to the lawyers representing the class of borrowers who were cheated by Navient. The borrowers who did not receive any money will get nothing.
The settlement was an unprecedented settlement for Navient, and it will benefit borrowers who have fallen behind on their loans.
The federal government and 38 states and Washington, D.C. filed a lawsuit against Navient in response to the CFPB’s investigation. The settlement required Navient to forgive nearly $1.7 billion of private student loan balances for nearly 66,000 borrowers and distributed $260 in individual restitution payments to almost three million federal borrowers. The first round of eligible private borrowers should receive a letter from Navient in July 2022, and those who have fallen behind on their payments should expect a postcard in spring 2020.
A federal court recently found that Navient violated the TCPA by mistreating 17,000 people. Its settlement with the Turner Law Offices, which filed the suit, determined that Navient violated the TCPA because it obtained borrowers’ information from third-party sources. This practice led to a large number of consumers being unable to repay their loans. Fortunately, the TCPA settled the case, and now the plaintiffs can pursue compensation for their losses.
The lawsuit against Navient is related to a federal government settlement between the CFPB and the Consumer Financial Protection Bureau.
It is the third-largest student loan servicing operator in the country with more than 12 million borrowers. Although it is too early to say whether borrowers will receive compensation, it’s important to understand the details of the settlement. A large portion of this case has been linked to the CFPB and Navient’s actions against investors.
Besides the federal lawsuits, the state of Washington filed a lawsuit against Navient in 2017. The suit claims that Navient violated the Consumer Protection Act and acted unfairly by granting loans to students in for-profit schools. Moreover, the state has not compensated current borrowers for their unpaid loans. Therefore, the case is still ongoing. There are currently more than ten thousand suits pending against Navient.
The lawsuit is filed against Navient because the company failed to adequately educate its borrowers about the PSLF.
The federally-guaranteed loans were not the only source of revenue for Navient. The company reacted to the scandals by leveraging private loans as bait to attract more government loans. However, the lawsuits remain, despite the company’s failure to acknowledge wrongdoing.
Despite the court ruling in the case against Navient, it is unlikely that the case will be settled as a class action. The judge in the case has ruled that Navient had breached the principles of the Thomson Reuters Trust Principles. The suit has been argued by the United States Department of Justice. The suit was filed in the U.S. District of Columbia on February 28, 2010.
