Report Reveals Navient Pushed High-Cost Plans on Struggling Borrowers

According to a Department of Education audit, Navient Corp., the third largest student loan servicing company in the United States, pushed tens of thousands of struggling borrowers into higher-cost repayment plans.

While the audit was conducted in 2017 audit, the findings have been kept from the public until now. The details of the audit appear to confirm the claims made in federal and state lawsuits. Lawsuits that have been filed against Navient accuse the student loan servicing company of lining it’s profits by persuading borrows to opt into high-cost plans without telling them about cheaper options that would save substantial amounts of money.

Despite the ongoing lawsuits, the Education Department did not share the results of the audit with the plaintiffs. Speaking about the audit, Aaron Ament, president of the National Student Legal Defense Network, said, “The existence of this audit makes the Department of Education's position [on the Navient lawsuits] all the more disturbing.”

Navient disputes the findings contained in the audit and claimed that the contract in place with the Education Department doesn’t stipulate that customer service representatives have to discuss all available options with struggling borrowers.

Paul Hartwick, a spokesman for Navient, had the following to say, “This [audit], when viewed as a whole, as well as dozens of other audits and reviews, show that Navient overwhelmingly performs in accordance with program rules while consistently helping borrowers choose the right options for their circumstances.”

Navient is being sued by California, Illinois, Mississippi, Pennsylvani, and Washington, and each state says that the actions taken by the company violate consumer protection laws. In a separate lawsuit, the Consumer Financial Protection Bureau called the Navient’s business practices unfair, deceptive and abusive.

Only Illinois and Pennsylvania were informed about the audit, the other 3 states were not given copies from the Education Department. According to Liz Hill, a spokeswoman for the Education Department, “FSA performed the review as part of its own contract oversight, not for the benefit of other agencies.”

Consumers who struggle to keep up with their student loan payments can be offered forbearance, which delays their payments for a specific period of time. However, the loan will continue to accrue interest during the forbearance plan, making it a more expensive option in the long run.

While there is no public record for the number of struggling borrowers who have loans serviced by Navient, the company’s most recent annual report shows that it services 6 million student loan borrowers. According to the report, 12.7% of Navient’s borrows are more than 30 days past due.

Chicago Consumer Law Attorneys

At Atlas Consumer Law, we are dedicated to helping clients with their consumer law cases. If you think your rights as a consumer have been violated, you should immediately get in touch with our legal team to discuss your options. We can explain all of your rights under the law and build a strong legal strategy that will allow you to pursue the justice you deserve.