The other day I wrote that student loan servicers are not your friends. I advised borrowers who are paying back student loan debt to keep good records, to follow up and make sure your requests are handled according to your wishes, to take notes during conversations, and to keep track of all payments and canceled checks.
That may have been good advice. The student loan servicer Navient has just been sued by the federal government—in fact, it was hit by three lawsuits in one day.
Looking Out for Their Own Interests
As reported by The Washington Post, Navient “misallocated payments, steered people into costly plans, supplied the wrong information, and ignored borrowers’ pleas for help, according to a lawsuit filed Wednesday by the Consumer Financial Protection Bureau.”
“Navient has systematically and illegally failed borrowers at every stage of repayment,” CFPB Director Richard Cordray said on a call with reporters Wednesday, the Post reported. “These unlawful practices have cost student loan borrowers across the country both heartache and money. And we are working to make sure they do not happen again.”
Navient said that the suit is unfounded and politically motivated, coming as it did just a day before the inauguration.
Is it Business … or Fraud?
But why wouldn’t Navient, or any business, look out for its own interests, even at the expense of students? The CFPB alleges that Navient amassed $4 billion in interest charges by steering students toward forbearance instead of into income-driven repayment plans. Donald Trump might say that’s business. With billions of dollars at stake, the temptation to run such a business fraudulently seems too great.
I wonder if the answer isn’t to have a government or other nonprofit entity in charge of servicing student loans so that the servicer doesn’t benefit from loans that are serviced improperly.
Read more at the Washington Post.