FOR IMMEDIATE RELEASE: January 18, 2017
CONTACT: Alexis Goldstein, Americans for Financial Reform
alexis@ourfinancialsecurity.org
Americans for Financial Reform welcomes the news that the Consumer Financial Protection Bureau took action to protect student loan borrowers today by suing that nation’s largest student loan servicer Navient for steering struggling borrowers toward paying more than they had to on their loans. The Bureau is joined by state attorneys general from Illinois and Washington, who today both filed their own lawsuits.
By pushing borrowers into consecutive periods of forbearance, rather than informing them of their rights to income-driven repayment options, Navient added on $4 billion in interest charges to the principal balances of these borrowers. The Bureau is seeking relief for borrowers for this and other violations of Federal consumer financial laws. The Bureau’s lawsuit also describes how Navient falsely claimed to credit rating agencies that borrowers had defaulted on their loans, when in fact these borrowers had received debt relief due to being totally and permanently disabled, some as a result of their service in the military, harming their credit ratings as a result.
This lawsuit is not the first time that Navient has faced government action to stop its illegal student lending practices. In 2015, the FDIC and the Department of Justice found that Navient overcharged nearly 78,000 members of the military on their student loans, in violation of the Servicemembers Civil Relief Act. And the Bureau has long identified problems with student loan servicing, including at Navient. The Bureau’s extensive 2015 student loan servicing report showed that Navient had more complaints than any other servicer.
We commend the CFPB for taking action today to protect student loan borrowers from abuse. This action makes clear why we need a strong, independent CFPB under the leadership of Director Cordray. Be it through proposing a Payback Playbook to make loan repayment options more clear, providing a public and searchable complaint system where scammed borrowers can go for help, or taking action against Navient’s illegal actions, the Bureau is working hard to protect consumers and borrowers. That work is putting billions of dollars back in the pockets of the people who earned them, rather than the coffers of companies who stole from them, and it is vital that it continue.