The Consumer Financial Protection Bureau (CFPB) filed a lawsuit last week on behalf of millions of student borrowers who may have been illegally cheated or deceived by Navient, the nation’s largest servicer of student loan debt. Navient, formerly known as Sallie May, who also services student loan debt. Navient counts over 12 million borrowers with over $300 billion in debt. The Navient lawsuit comes at a time of growing student loan debt, which now stands at more than $1.4 trillion dollars nationally.
The CFPB lawsuit alleges Navient “systemically and illegally failed borrowers at every stage” as well as used “shortcuts and deceptions” to the detriment of students. Additionally, students may have been cheated out of possible lower payments or alternative options. Some state governments are also beginning to take notice, with Illinois and Washington attorneys general already filing suits against Navient.
Even though the Department of Education is technically the lender for all federal student loans, third-party companies like Navient actually service the debt. Your monthly loan payments are made to your loan servicer, not necessarily the Department of Education. In order to find if Navient is servicing your student loan, visit the Federal Student Aid website.
Here are a few things you can do to stay on top of your student loans:
Research Income-Based Repayment Plans
Depending on your income and circumstances, you may qualify for an income-based repayment plan. Under this repayment option, your monthly amount owed is capped at a percentage of your income. This option can be more beneficial than forbearance, which involves the borrower not making any payments even though interest steadily accumulates.
The New York Times reports one man applied for an income-based repayment plan, only to have Navient lose his paperwork multiple times. Navient also encouraged him to apply for loan forbearance instead of an income-based repayment plan. The lawsuit alleges that half of struggling borrowers may qualify for $0 monthly payments based on their income under the income-based repayment plans, but that Navient misled consumers about this option. By forbearing, these borrowers would continue to accumulate interest.
Communicate in Writing
Getting requests, correspondence, and confirmations in writing can help you now and down the road. By getting it in writing, you can help ensure that action is actually taken on your behalf, and that you are protected in the event you have to file disputes later in the process. Even though calling a loan servicer may seem easier, it’s most likely more beneficial in the long run to communicate via email or mail. Of course, it’s equally important to keep an updated file of all correspondence for your records.
Communicate Your Experience to the Appropriate Organizations
If you have had a bad experience with Navient or another loan servicer, notify an appropriate government agency, the lender, and/or an attorney who can help. In order to make your opinion on your loan servicer known, consider filing complaints with the Department of Education or the Consumer Financial Protection Bureau. You should also consistently review your credit report for errors. You can also file complaints directly with Navient.
Unfortunately, it is not easy to switch your student loan servicer. Consolidating or refinancing your student loans may change your servicer to a different provider like Great Lakes Higher Education, Nelnet, and FedLoan Servicing. However, consolidating or refinancing are options that also involve risks.