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AG Ferguson announces multi-million dollar lawsuit against major student loan servicer

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Washington Attorney General Bob Ferguson wasted no time placing the nations largest servicer of student loans in his legal crosshairs.

“The crushing debt that students have and graduates have in our state is significant and it’s compounded by entities like Navient who do not pay by the rules,” said Ferguson.

Navient is formerly known as, Sallie Mae.

Ferguson alleges the servicer used unfair and deceptive practices including aggressive and misleading collection actions against Washington consumers who filed at least 100 complaints against the company.

“Over and over we see repeated complaints and that’s why we think this is significant,” explained Ferguson.

The Consumer Financial Protection Bureau and the State of Illinois also filed a lawsuit against Navient today.

In Washington’s case, Ferguson used one example of how Navient would allegedly harass customers who paid their loans on time.

One student told the Attorney General office, that she pays $600, more than the amount due each month, but for months she and her co-signer received harassing collection calls on past due balances. Navient wouldn’t count the following months with zero balances as consecutive on time payments.

“Navient would advance her due date and send her a bill for zero for the next two months. Since the borrower didn’t send any additional payments to those zero dollar bills, Navient would count that as a failure to make a consecutive on time payment. Even though the bills were current but paid ahead,” explained Ferguson.

Ferguson doesn’t have firm numbers but says this effects thousands of borrowers and his office will be asking the court for millions of dollars from Navient.

Click here for the Attorney General’s Student Loan Survival Guide created to help student loan borrowers in Washington.

Click here to also file a complaint with the Attorney General’s Office – General Consumer Complaint Form.

Navient says lawsuit from Washington Attorney General is unfounded. Below is the company’s statement:

WILMINGTON, Del., Jan. 18, 2017—Navient, the nation’s leading loan management, servicing and asset recovery company, today issued the following statement on legal action filed against it today:

The allegations of the Washington Attorney General, Illinois Attorney General and Consumer Financial Protection Bureau are unfounded, and the timing of these lawsuits—midnight action filed on the eve of a new administration—reflects their political motivations. Navient welcomes clear and well-designed guidelines that all parties can follow, and we had hoped our extensive engagement with the regulators would achieve this objective. Instead, the suits improperly seek to impose penalties on Navient based on new servicing standards applied retroactively and applied only against one servicer. The regulator-asserted standards are inconsistent with Department of Education regulations, and will harm student loan borrowers, including through higher defaults.

Navient has a well-established, superior track-record of helping student loan borrowers succeed in repayment.

49 percent of loan balances serviced by Navient for the federal government are enrolled in income-driven repayment plans. Assertions that we do not educate borrowers about IDR plans ignore the facts.

Navient is a leader in advancing policy recommendations to streamline enrollment and reenrollment in income-driven plans—reforms which we believe would make a meaningful difference for millions of Americans with student loans.

Federal borrowers serviced by Navient are 31 percent less likely to default than their peers at other servicers. Private loan delinquencies and defaults are at among historic lows.

In 2009, Navient pioneered the first private education loan modification program. The program was designed to help customers stay current on their loans and, unlike federal program solutions, make progress on repaying their principal balance. Today, more than $2 billion in loan balances are enrolled in these programs.

Navient has a responsibility to its customers, shareholders, and employees to defend itself—publicly and in court—against this unsubstantiated, unjustified and politically driven action. We cannot and will not accept agenda-driven ultimatums designed to get headlines rather than help for student borrowers. We will vigorously defend against these false allegations and continue to help our customers achieve financial success.

Navient has posted additional information at navient.com/facts.

 

 

 

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