A group of more than two dozen state attorneys general has accused Navient
Corp. (formerly known as Sallie Mae), America’s largest student
loan firm, of violating state laws to ban abusive or unfair practices
by paying call center workers based on how fast they could get struggling
borrowers off the phone.
This comes after a two-year investigation that began in late 2013, during
which were analyzed more than 4,000 consumer complaints, thousands of
Navient documents, and recorded calls between borrowers and call center
workers. The allegations have been described as “devastating”
by officials, calling into question the company’s ability to provide
basic customer service to over 12 million American student loan borrowers.
The investigation found that Navient inappropriately steered borrowers
in need of help to plans which temporarily defer payments rather than
towards White-House promoted income-based plans which could have eventually
led to debt forgiveness. This tactic was not only to get borrowers off
the phone faster, but would also allow
student loan balances to grow during the period of deferment and was cheaper and easier
for Navient. According to a 2006 Education Department study, borrowers
who use temporary deferment plans are more likely to default on their
federal student loans and should not be the first option for struggling
Officials have also accused Navient of failing to inform certain borrowers
of their eligibility for student loan forgiveness based either on disability
or because their school defrauded them or abruptly closed down.
The findings of this investigation were shared with Navient in mid-April
with the intention of reaching a settlement, but so far, the company has
yet to formally respond.
This is not the first time that Navient has been accused of mistreating
borrowers. In recent years, the Department of Justice, federal banking
and consumer regulators, and state prosecutors have also turned their
attention to the company to investigate complaints. Navient has denied
any wrongdoing. Now, the state attorneys general are demanding reforms
aimed at improving customer service and ensuring that borrowers are being
made aware of their options.
The Consumer Financial Protection Bureau says that is has found enough
evidence to support a lawsuit against the company for cheating borrowers.
America’s Largest Student Loan Firm Abused Borrowers and Broke the
Law, Officials Say
Sulaiman Law Group, LTD has years of experience helping struggling student
loan borrowers handle their debt. For more information on how we can help, please
contact a Chicago debt relief attorney at our firm for a consultation.