What this Navient lawsuit means for your student loans

There is a new lawsuit against Navient.

Here’s what you need to know and what it means for your student loans.

Student loans

New Jersey Attorney General Gurbir S. Grewal today filed a lawsuit in New Jersey Superior Court alleging that Navient, one of the largest student loan service agents, “engaged in unreasonable business practices, deceptive conduct and misrepresentation in servicing thousands of New Jersey consumer student loans.”

“Higher education should be a route to success, not a route to financial ruin,” Grewal said. “Yet even before the financial fallout from the COVID-19 pandemic, too many New Jerseyans were struggling to repay their student loans. And the financial situation of too many student loan borrowers has worsened because their loan officers put corporate profits ahead of the borrower’s best interests.

Navient, from Sallie Mae, has over 12 million student loan clients and serves over $ 300 billion in governments and private student loans.

The allegations: student loans from Navient

The allegations against Navient include:

1. Orient borrowers towards forbearance instead of income-oriented repayment plans

  • More expensive tolerance: New Jersey says Navient puts profits ahead of people by allegedly steering student loan borrowers towards forbearance (suspension of student loan payments) instead of income-driven repayment plans (which base your payment on your loan). student loan on discretionary income and family size).
  • Best Income-Oriented Repayment Option: The state argues that Navient should be in the borrower’s best interest, not its own, and therefore should help borrowers choose the best option to repay their student loan. Rather than investing the time and resources to help borrowers facing long-term financial difficulties, New Jersey says Navient chose the more expensive option of forbearance.
  • The result is that borrowers pay more interest: As a result, borrowers turned to forbearance “suffered consequences, including unnecessary accumulation of interest, adding interest to principal, and wasting months of timely payments that would otherwise have counted for. cancellation of the loan ”.
  • Borrowers have not recertified income: New Jersey says Navient failed to properly warn borrowers when to recertify their income for income-based repayment plans. As a result, borrowers’ income-based repayment plans may have expired, resulting in a higher student loan payment.

2. Encourage borrowers to borrow private student loans with a co-signer, which in turn makes it extremely difficult to obtain a co-signer release.

  • Co-signatories: New Jersey alleges that Navient encouraged borrowers to obtain student loan guarantees from co-signers, which “increased Navient’s chances of repayment in the event of student default.”
  • Co-signer Difficult Release: Once the co-signer was approved, New Jersey alleges Navient made it difficult for a co-signer on a student loan to be released.

3. Deceive borrowers about the amount of their student loan delinquency

  • Delicate language: New Jersey alleges that Navient employees were “trained to attempt to collect more than the overdue amount using language that misled borrowers about how much they owed.”
  • Too much paid ?: New Jersey says Navient collected past due student loan payments and next month’s payment by calling the amount “Current Amount Due,” which may have resulted in borrowers overpaying.

“Not only are these baseless claims recycled, Navient has always provided excellent service to student loan borrowers, helping millions of people realize the benefits of higher education and successfully repay their loans,” Navient said in a statement. communicated. declaration To The hill. “As a service provider for the federal government, we have led enrollment in affordable payment plans and reduced default rates. In fact, over half of the loan portfolio we serve is in income-based repayment. “

What the Navient lawsuit means for your student loans

If you have a student loan, you’ve probably dealt with a student loan manager, which is the company you send the monthly student loan payments to. You don’t have to live in New Jersey to be affected by your student loan officer. Although this lawsuit alleges several unfair and deceptive practices and may not apply to your situation, it is important that you learn about your student loans. Make sure you understand the following when dealing with student loan repayment:

1. Understand all your options

When it comes to paying off a student loan, the good news is that there are a number of options available to you. However, don’t expect your student loan officer to tell you which option is best. Here are four solid options, all at no cost:

2. Confirm in writing

Your instinct may be to call your student loan manager. However, your best bet is to correspond in writing with your student loan officer to ensure a written record of communication.

3. File a student loan complaint

If you have a problem with your student loan officer, know your rights. You can file a formal complaint with:

  1. Your lender
  2. Your student loan manager
  3. State Attorney General
  4. State Department of Education
  5. US Department of Education
  6. Federal Trade Commission
  7. Consumer Financial Protection Bureau

Make sure you have the supporting documents. Your student loans manager may also be able to resolve the issue first.

Student loans: reading

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