The Lawsuit Against Navient: FAQ - Boston Student Loan Lawyer

Yesterday, the federal Consumer Financial Protection Bureau (CFPB) announced that it filed a lawsuit against Navient, one of the country’s largest student loan servicers, for conduct that violates various consumer protection statutes. The CFPB accused Navient of failing student loan borrowers “at every stage of repayment.” This is a major development. Here’s what you need to know.

What Are The Allegations?

The CFPB is alleging that Navient and one of its debt collection agencies, Pioneer Credit, engaged in various activities that harmed student loan borrowers and violated their legal rights. Some of the alleged misconduct include steering borrowers into forbearance instead of affordable income-driven repayment plans, resulting in large balance increases; incorrectly processing or improperly denying borrowers’ requests for legally available student loan repayment programs; misrepresenting borrowers’ legal rights, including veterans; and erroneously reporting negative information on student loan borrowers to credit bureaus. In its official complaint filed in federal court, the CFPB used scathing language, alleging that Navient has failed student loan borrowers and “failed to perform its core duties.”

Which Laws May Have Been Violated?

The legal causes of action – the statutes that the CFPB alleges Navient and its subsidiaries violated – include the Fair Credit Reporting Act (FCRA), the Consumer Financial Portfolio Act (CFPA), and the Fair Debt Collection Practices Act (FDCPA).

How Can I Join The Lawsuit?

You can’t. This isn’t a class action lawsuit brought by student loan borrowers directly. The lawsuit was filed by the CFPB, which is a federal watchdog agency tasked with protecting consumers.

If I Have Student Loans With Navient, Does This Mean I’ll Get Any Relief?

It’s way too early to say, and it will depend on how the lawsuit concludes. Usually these types of cases result in a settlement, and the terms of the settlement will dictate what, if any, relief will be provided to student loan borrowers harmed by Navient and Pioneer. The CFPB is asking for injunctive relief (meaning a court order to stop Navient from engaging in certain practices), as well as financial compensation and penalties.

Is There Anything I Can Do If I Have Student Loans With Navient?

Now would be a good time to do a bit of a student loan self-audit. Review your payment histories for any irregularities, and pull your credit reports to see if Navient has reported any erroneous negative information to the credit bureaus. Keep copies of all correspondence from Navient. If you have dealt with Pioneer Credit, the debt collection agency, be sure to keep all records.

Is This Lawsuit “Political”?

Navient released a statement dismissing the CFPB’s lawsuit – filed during the last week of the Obama presidency – as a political stunt. My response is that this was a strategic decision, rather than a political maneuver, and it is in keeping with the CFPB’s core mission to protect consumers who have been harmed by the financial industry. Navient’s systematic failures and mistreatment of student loan borrowers are well-known and well-documented, and there is little doubt of the veracity of the allegations against the company. That said, Republicans have vowed to dismantle or significantly weaken the CFPB under the new Trump administration. Filing the lawsuit now will put the new administration in an awkward position of potentially pulling the plug on this lawsuit if they decide to gut the CFPB during the next year. This would make them appear to ally with the student loan industry over student loan borrowers. Ultimately, even if you could characterize the timing of this as “political,” my view is that since this is a strategic decision designed to protect the rights of student loan borrowers harmed by Navient’s practices, it is consistent with the CFPB’s mission.