Our team was alarmed to learn that recently, the Consumer Financial Protection Bureau found that many loan servicers actually give student loan borrowers incorrect or insufficient information about public-service loan forgiveness. There are currently several money-saving options for many student loan borrowers. However, if borrowers are unaware of these options, these programs become useless, and the borrower is left missing out on potentially, significant savings on their monthly student loan payments.
In another alarming moment, in the student loan industry, the U.S. Consumer Financial Protection Bureau and the Illinois and Washington attorneys general sued Navient Corp, the nation’s largest student loan servicer, in January. They lawsuits are alleging that it harmed student loan borrowers throughout the repayment process.
Among other things, the CFPB alleges that since at least January 2010, Navient misallocated payments, steered struggling borrowers toward multiple forbearances instead of income-driven repayment plans, and provided unclear information about how to re-enroll in income-driven repayment plans and how to qualify for a co-signer release. The CFPB is asking Navient to compensate the borrowers the agency says were harmed.
The Illinois and Washington suits make similar claims to the CFPB’s allegations and also allege that Navient, when it was part of Sallie Mae, made subprime loans to students, particularly those attending for-profit schools. Navient broke off from Sallie Mae Bank, one of the largest private student loan lenders, in 2014.
Navient has filed motions to dismiss all three cases and says the suits are based on new servicing standards that are being applied retroactively, according to a March 2017 fact sheet.
The lawsuits could potentially take years to play out “because of the sheer amount of evidence” that the CFPB, Illinois, and Washington have gathered during their investigations, says Suzanne Martindale, a staff attorney at Consumers Union, the policy, and action arm of Consumer Reports.
Regardless of the outcomes, it’s a good idea for borrow’s to regularly check their student loan accounts and make sure their student loans are being serviced correctly. Luckily there are a lot of tools and services that can help borrowers get an overview of current loan balances and repayment options. For more information