https://www.consumeraffairs.com/news...nt-011817.html
The Consumer Financial Protection Bureau (CFPB) is suing Navient, the nation’s largest servicer of both federal and private student loans, saying it has failed borrowers at every stage of the repayment process for years.
The bureau says that Navient, formerly part of Sallie Mae, created obstacles to repayment by providing bad information, processing payments incorrectly, and failing to act when borrowers complained.
Through shortcuts and deception, the company also illegally cheated many struggling borrowers out of their rights to lower repayments, which caused them to pay much more than they had to for their loans, CFPB charged.
“For years, Navient failed consumers who counted on the company to help give them a fair chance to pay back their student loans,” said CFPB Director Richard Cordray. “At every stage of repayment, Navient chose to shortcut and deceive consumers to save on operating costs. Too many borrowers paid more for their loans because Navient illegally cheated them and today's action seeks to hold them accountable.”
http://www.latimes.com/business/la-f...118-story.html
http://www.consumerfinance.gov/about...age-repayment/The lawsuit, filed in U.S. District Court in Pennsylvania, says Navient violated the Dodd-Frank reform act, the Fair Credit Reporting Act and the Fair Debt Collections Practices Act. The agency is seeking redress for borrowers harmed by the practices and to prevent any future harm.
In response, Navient called the bureau’s allegations “unfounded” and questioned the timing of Wednesday’s lawsuit, noting it came just days before the Obama administration is set to leave office.
“The timing of this lawsuit — midnight action filed on the eve of a new administration — reflects their political motivations,” the company said in a statement posted on its website.
The filing of the lawsuit comes amid a flurry of new rules and regulations in the waning days of the Obama administration — and as the CFPB is under threat from Republican critics, who have complained that the bureau has too much power and that its attempts to help consumers have restricted access to credit.
Some Republican senators have even asked President-elect Donald Trump to remove Cordray as director, which if undertaken would probably set up a legal showdown over Trump’s right to do so.
Fails to correctly apply or allocate borrower payments to their accounts: As soon as a borrower begins to pay back their loans, student loan servicers are supposed to take a borrower’s payment and follow instructions from the borrower about how to apply it across their multiple loans. Navient repeatedly misapplies or misallocates payments — often making the same error multiple times over many months. The company all too often fails to correct its errors unless a consumer discovers the problem and contacts the company.
Steers struggling borrowers toward paying more than they have to on loans: When borrowers run into trouble repaying their federal student loans, they have a right under federal law to apply for repayment plans that allow for a lower monthly payment. But the Bureau believes that Navient steers many borrowers into forbearance, an option designed to let borrowers take a short break from making payments. But interest continues to add up during forbearance. Certain consumers with subsidized loans end up paying a heavy price because they could have potentially avoided those interest charges. From January 2010 to March 2015, the company added up to $4 billion in interest charges to the principal balances of borrowers who were enrolled in multiple, consecutive forbearances. The Bureau believes that a large portion of these charges could have been avoided had Navient followed the law.
http://files.consumerfinance.gov/f/d...-complaint.pdf
Saw this on Reddit and know that some people here need to be aware of this. It could impact a lot of people.