Navient Lawsuit – Can I Collect Damages if I Have a Student Loan?

Navient Lawsuit

Navient Lawsuit: What Student Loan Customers Need to Know (2020 Guide)

If you have a student loan, the Navient Lawsuit affects you – even if Navient is not your student loan servicing company.  You can file a complaint if necessary, check your credit report, and learn about repayment options.  Navient Corp., a major servicer of private and federal student loans.  It is facing multiple lawsuits alleging that it harmed student loan borrowers throughout the repayment process. The suits are still pending and could take years to conclude. In the meantime, here are answers to common borrower questions:

What is the Navient Lawsuit?

The U.S. Consumer Financial Protection Bureau and the Illinois and Washington attorneys general filed their Navient lawsuit in January 2017. Pennsylvania’s attorney general filed a suit in October 2017. The California and Mississippi attorneys general filed suits in June and July 2018, respectively.

According to the CFPB, Navient has been faced with allegations of misallocating payments, steering people into costly plans, and supplying the wrong information when borrowers pleaded for help with high monthly payments. Some of the allegations against Navient include misapplied payments, surprise late fees, processing delays, and misrepresentation of repayment options and repayment amounts.  Some of the allegations against Navient include misapplied payments, surprise late fees, processing delays, and misrepresentation of repayment options and repayment amounts.  The CFPB and the state attorneys general are all seeking financial redress for borrowers they say were harmed by Navient’s actions.

​“The lawsuits are full of deeply disturbing allegations,” said Rohit Chopra, senior fellow at the Consumer Federation of America and the former student-loan point man at the CFPB. “If this is true, then the company’s actions may be responsible for some of the pileup of defaults that we’ve seen in recent years.” (Source: collegeinvestor.com)

Navient Allegedly Forced Borrowers Into Forbearance

​Even more disturbing allegations say that Navient incentivized employees to encourage borrowers to postpone payments through forbearance, an option in which interest continues to accrue, rather than guide borrowers down the correct path and enroll them in an income-driven repayment plan that would avoid fees. CFPB alleges that Navient racked up $4 billion in interest charges to the principal balances of borrowers who were enrolled in multiple and consecutive forbearances from January 2010 to March 2015.

​CFPB further alleges Navient misled borrowers about the terms of renewing enrollment in income-driven repayment plans that limit monthly bills to a percentage of earnings, and also over reporting the loan discharge of disabled borrowers to the credit bureaus. The complaint further alleges that Pioneer Credit Recovery, a subsidiary of Navient, made illegal misrepresentations about the federal loan rehabilitation program available to defaulted borrowers. (Source: collegeinvestor.com)

Navient Lawsuit – Filed by the CFPB 

The CFPB (Consumer Financial Protection Bureau)  accused Navient of failing to act in its customers’ best interests. Among other things, the CFPB charged that Navient:

  • Failed to correctly apply or allocate borrower payments to their accounts
  • Steered struggling borrowers toward multiple forbearances instead of an income-driven repayment (IDR) plan
  • Deceived private student loan borrowers about cosigner release requirements
  • Reported loans incorrectly to the credit bureaus
  • Failed to inform borrowers of IDR plan renewal deadlines
  • Steered struggling borrowers toward multiple forbearances instead of income-driven repayment plans, and
  • Provided unclear information about how to re-enroll in income-driven repayment plans and how to qualify for a co-signer release.

In August 2017, Navient filed a motion for the CFPB lawsuit to be dismissed. A federal judge denied the motion. The CFPB is asking Navient to compensate the borrowers the agency says were harmed. Navient believes the CFPB’s claims are “unfounded,” and says the suits are based on new servicing standards that are being applied retroactively, according to an October 2017 fact sheet.

Update: This lawsuit is currently still open as of April 10, 2020. (Source: studentloanplanner.com)

Navient Lawsuit – Filed by State Attorneys General 

The CFPB lawsuit has been followed up with suits from the following states:

  • Illinois (January 2017)
  • Washington (January 2017)
  • Pennsylvania (October 2017)
  • California (June 2018)
  • Mississippi (July 2018)

The allegations made by the attorney generals in each of these states are similar to those made by the CFPB.

Update: As of April 10, 2020, all of the state lawsuits are still open. (Source: studentloanplanner.com)

Navient Lawsuit – Filed by Teachers 

In October of 2018, nine teachers filed suit against Navient. They were supported by the American Federation of Teachers, the second-largest teacher’s union in the United States.  In their lawsuit, the teachers allege that Navient misled borrowers in public service professions when they tried to access Public Service Loan Forgiveness (PSLF). In particular, these teachers claim that Navient attempted to keep borrowers from transferring their loans to FedLoan Servicing (the exclusive servicer for PSLF) in order to avoid losing the associated fees.

Update: In July 2019, a federal judge dismissed 14 of the 15 claims against Navient, and there is a pending settlement in place that is expected to be finalized sometime in April 2020. (Source: studentloanplanner.com)

How Does The Navient Lawsuit Affect Your Student Loans 

Whether Navient is your student loan service provider or not, you should probably pay attention to the lawsuits.  Also, it is a good idea to review all the repayment options that are available to you today.

First, you may have been told that you are locked into high monthly payments believing there is no other option. There are fees, expenses and interest rates you can minimize, or avoid altogether, if you select the right option based on your current situation. You should contact your student loan servicer about  income-based repayment plans and other repayment options to see if there is a better payment  solution available.

If your student loan servicing provider inaccurately reported missed or late payments to the credit bureau, these mistakes will have an adverse impact on your credit report. This affects your ability to borrow.  For instance, it could impact your plans to buy your first home.  Loan approval could be delayed due to inaccurate amounts being reported as discharged or owed. You should always monitor your credit report on a regular basis. Make sure that you actively dispute items that are incorrect that show up there.

Am I Entitled To Damages From a Navient Lawsuit?

Probably not at this point. The Consumer Financial Protection Bureau (CFPB) filed the lawsuit against Navient, which is a federal government agency. Since this type of litigation is not a class action lawsuit, you are not entitled to settlement proceeds.  However, depending on the terms of the settlement, there may be some benefits to borrowers in the future.  Also, as more suits are filed, there may be a class action which could include you.

Is Navient student loan Forgiveness Real?

There’s no such thing as a “Navient student loan forgiveness” program, and it’s unlikely that Navient borrowers will get the compensation the CFPB is requesting anytime soon.

There’s no such thing as a “Navient student loan forgiveness” program, and it’s unlikely that Navient borrowers will get the compensation the CFPB is requesting anytime soon.

Navient borrowers with federal student loans may be eligible for one of the federal student loan forgiveness programs, such as Public Service Loan Forgiveness or forgiveness through an income-driven repayment plan. However, forgiveness through these programs takes diligence and it isn’t immediate. It takes at least 10 years of making on-time payments to qualify for PSLF, for instance. (Source: nerdwallet.com)

If You’re looking for student loan Forgiveness

  1. Pursue an available forgiveness plan like PSLF or IDR – Your best bet is to pursue one of the currently available forgiveness programs, like the PSLF or IDR plan forgiveness. Student loan forgiveness through these programs isn’t immediate and has strict requirements.
  2. Consolidate or refinance your student loans – Another option is to switch servicers by consolidating or refinancing your student loans.  However, there’s no guarantee that your new servicer will turn out to be much better than Navient. Switching could also erase any progress you’ve made towards forgiveness and any opportunities like deferment by refinancing.
  3. Continue to work with Navient with caution – You could also continue to work with Navient as your loan servicer. You’ll just need to keep in mind that they do not necessarily have your best interests at heart. As you pay off your student loans with them, be sure to double-check your options with a student loan services professional.

Is Navient my Student Loan Servicer?

Your student loan servicer is the company you make payments to each month. It’s not usually the same company that lent you money in the first place.  Your student loan servicer is assigned by the Department of Education. Here’s how to tell which company services your student loans:

  • For federal loans: Log on to the Federal Student Aid website using your FSA ID. Click on the blue numbers in the loan table to see more details about each loan, including your “Current ED servicer.” It may be Navient, or it could be another company such as FedLoan Servicing, Great Lakes Higher Education or Nelnet.
  • For private loans: If there’s no record of your student loans in the Federal Student Aid system, the loans are private. Log on to your online loan account, if you have one, or check your last loan statement. The company powering the account or sending the statement is your loan servicer.
  • Not sure whether your loans are federal, private, or a mix of both? Navient services both federal and private loans. Check your credit report to see all of your education debts, including federal and private student loans.

What Do Student Loan Servicers Do?

Student loan servicers serve as a liaison between the lender and borrower. They process payments, answer questions, and keep track of the borrowers accounts. A loan servicer will also work with you for free, to help with student loan repayment plans and student loan consolidation.  Federal Student Loan providers will assign a loan service provider through the US Department of Education.  Private loan lenders will assign private student loan providers.  ​If you have student loans, you will find at some point, your student loan has been transferred to a servicer. When your loan service is transferred, you must immediately contact the new student loan servicer.  At this point, you should update your payment method, make timely payments, and ensure that there are no changes to your loan terms.

Navient Login – Check Your Loans 

A big part of keeping up with your student loans is making sure that you are following up and making sure everything is correct with your loans.  Check out your Navient Student Loans directly on their website for the most accurate information:

Navient Login: https://www.navient.com/

What can you do if Navient is your Servicer?

If your federal student loans are currently with Navient, these lawsuits may have you worried. But don’t panic. There’s a good chance your loan is being serviced exactly as it should be. If you notice any problems with your student loans, however, contact Navient immediately. Bad publicity from the Navient lawsuits should actually have a positive impact on their customer service.  The company should be eager to fix mistakes.

But if you come across an issue Navient just won’t resolve, you can file a complaint with the CFPB or with the Department of Education.

Can I switch student loan Servicers?

Do you want to just switch student loan servicers altogether? Unfortunately, that’s not easy to do. The federal government only allows borrowers to switch servicers during a Direct Loan Consolidation.  You could also switch student loan servicers by refinancing your student loans.  However, you’ll lose out on federal student loan benefits, including eligibility for student loan forgiveness programs like PSLF.

Nevertheless, it is possible to switch student loan servicers through federal student loan consolidation or private student loan refinancing. But you shouldn’t consolidate or refinance solely to switch servicers.  There are potential risks associated with each, says Adam Minsky, a Boston-based lawyer specializing in student loans. Also, there’s no guarantee you’ll be better off with a different servicer.  “The other servicers aren’t exactly rainbows and sunshine,” Minsky says.  Consider refinancing only if you can comfortably afford your expenses, student loan payments and other debts, and you have good credit. Once you refinance federal student loans, they’ll no longer be eligible for income-driven repayment plans or forgiveness programs.

What Can I do to protect myself?

First, check to see if Navient is your student loan service provider.  Even if you can’t change servicers, there are several things you can do to voice your concerns and protect yourself as a borrower.  You can file complaints if you are mistreated, check your credit report for errors, learn about your repayment options, and watch out for companies that charge fees for student loan help.

File student loan complaints

If Navient is you’re servicer, you can submit a complaint to Navient’s Office of the Consumer Advocate. Call 888-545-4199 or email advocate@navient.com. You can then file complaints to one or more of the following entities:

If a complaint doesn’t help, you can contact the Federal Student Aid Ombudsman Group. This method should be used only as a last resort, says the federal student aid office. Complete all information on the Ombudsman Information Checklist before contacting. When you’re ready to reach out, here’s how to get in touch:

Phone: 877-557-2575
By mail: U.S. Department of Education
FSA Ombudsman Group
P.O. Box 1843
Monticello, KY 42633

Check your credit report for errors

The CFPB also alleges that Navient incorrectly reported disabled borrowers’ accounts as “in default” when the borrowers had actually gotten loan relief through the government’s Total and Permanent Disability discharge program. To guard against a mistake like that, which could severely hurt your credit score, check your credit report for errors. You can get one free credit report every year from each of the three major credit bureaus, Equifax, Experian and TransUnion.

Understand your repayment options

Student loan servicers are supposed to help you understand the various repayment options. By learning about the options yourself, you can be empowered to hold your loan servicer to that standard. However, each of the following options has risks.

  • Income-driven repayment plans can lower your monthly federal student loan payments by capping your payment at a percentage of your income. They also offer loan forgiveness after you make on-time payments for 20 or 25 years, depending on the plan.
  • Student loan forgiveness programs, such as Public Service Loan Forgiveness, can relieve your federal student loan debt if you work for a certain type of employer and make on-time payments for a certain period of time.
  • Federal consolidation doesn’t lower your monthly payments or save you money, but it’s sometimes necessary to qualify for income-driven repayment or a forgiveness program. Consolidating is frequently confused with student loan refinancing, which is a way to save money on interest by getting a lower rate. But if you refinance federal student loans, you lose federal loan forgiveness and repayment options.

Watch out for companies that charge fees for help

You can sign up for the options above on your own for free. But some companies that aren’t affiliated with the Department of Education capitalize on subpar student loan servicing practices by charging fees to enroll borrowers in free federal student loan programs. So-called student debt relief companies often advertise messages such as “Obama Student Loan Forgiveness” on Facebook and Google. If you’re tempted by such an offer, know that you don’t have to pay for student loan help.  If your servicer isn’t answering your student loan questions, contact the Department of Education or your state’s attorney general’s office for help. (Source: nerdwallet.com)

Additional Steps To Protect Yourself From Student Loan Servicing Errors 

Whenever you’re dealing with your student loan servicer, including Navient, the burden of proof is on you to make sure that things don’t get messed up. That’s why it’s essential to document everything. Here’s a guide to protect yourself when dealing with your student loan servicing company.

Document All Verbal Communication And Follow Up In Writing

​Whenever you make a phone call and speak with an agent, follow up your conversation with a written communication, whether it be a faxed or certified mailed letter. Some student loan servicers allow for email under limited circumstances. This way, if there are any disputes, you will have a paper trail to prove your point, and avoid late fees or miscalculations to your detriment.

What kinds of requests should be made in writing? Some of the most significant transactions that could make room for error are payment requests, processing requests, payment instructions, and forbearance.

When sending requests in writing, always send your mail certified mail – that way you have proof it was received. If you’re using email, only use the Secure Inbox provided by the loan servicing company.​

Finally, keep a running log of all communications. We recommend a Google Doc or similar, so that you can have it all stored in one place.

Ensure Your Loan Servicer Follows Payment Instructions

To avoid or minimize mistakes in processing documents with important instructions, be sure to communicate through formal written correspondence to accompany special instructions. This means sending a letter with your student loan account number to accompany the check which also has instructions written in the “memo” section of the check.

Aside from the benefit of timely payments that are documented, automatic payment is a better option than sending paper checks because you may be eligible for a 0.25% interest rate deduction when you enroll in automatic payments.

Monitor Your Credit Score And Credit Report

It is crucial for you to monitor your credit score and credit report for errors, because your ability to make timely payments can significantly impact your credit score. You can monitor your credit score and credit reports on the three major credit bureaus: Experian, Equifax, and Transunion. You can request a copy of your credit report from each lender, or use a resource such as AnnualCreditReport.com.

Student Loan Servicers frequently make mistakes in reporting accurate student loan payments to the credit bureaus. Unfortunately, you have to monitor your credit report regularly and take steps to correct any mistakes.

“Navient has systematically and illegally failed borrowers at every stage of repayment,” CFPB Director Richard Cordray said on a call with reporters Wednesday. “These unlawful practices have cost student-loan borrowers across the country both heartache and money. And we are working to make sure they do not happen again.”

The CFPB acknowledges the critical impact on borrowers as a result of flaws in the loan servicing system. The errors could stand in the way buying decisions that are impacted by your credit report, such as buying a home. While you shouldn’t be responsible for the student loan servicer’s mistakes, being proactive will save you time and effort in the long run. (Source: thecollegeinvestor.com)

Navient Lawsuit – Final Thoughts

While your student loan servicer is there to help you understand your available options for student loan repayment, you must do your due diligence to explore all of your options.  Keep Paying Your Loans.  It’s generally not a good idea to stop paying your student loans even if a lawsuit has been filed. Stopping payment could impact your credit and even result in legal action against you. If you need advice on how to handle your student loan debt while these lawsuits are playing out, you may want to talk to a lawyer or a credit counselor.

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