The student loan epidemic in the United States has been growing for well over a decade. Former students are unable to meet their repayment deadlines, and many are falling into default. While this might seem like a hopeless situation, student loan giant Navient isn’t helping the situation. The Consumer Financial Protection Bureau has been investigating the company for the better part of two years and recently sent them a letter saying it appears that CFPB violated consumer protection laws. Right now, CFPB is deciding whether to pursue legal action.
Navient is not alone in these allegations. The CFPB sent letters to several colleges, including ITT Educational Services and Corinthian Colleges Inc., before suing them.
In Navient’s case, the student loan giant is accused of treating students as a profit center. The company holds more of the student loan repayment industry than any other company in the country, Consumerist says, and is now under investigation for overcharging borrowers and mistreating them in many other ways. In addition to that, the Department of Justice brought accusations to the company’s doorstep in 2014 as they were believed to be cheating active-duty troops on their student loans. This has allegedly been going on for nearly a decade.
It is known that economic growth is slowing, and there is some concern that improper servicing of loans may be at the root of it. Enough borrowers have complained at this point that they have been forced to pay larger monthly payments than originally required, often forcing many into bankruptcy or into default, at the very least.
Apart from the obvious abuse when it comes to repayment plans, the company is also under investigation regarding its debt collection practices and the way in which it interacts with customers or debtors. Many of these debtors are distressed, or generally in a bad place in their lives, and many of the interactions seem borderline draconian.
On Navient’s side of the fence, executives have held a meeting with investors stating that they couldn’t ensure the security of the company in the future, further stating that a lawsuit brought forth by the CFPB could in fact hurt the company irreparably. As a result, Navient stocks have dropped 39.6 percent as of the start of this year.
Though the company is intent on resolving all of their issues, there is a good chance that they will face serious repercussions. And, of course, there are many who are without sympathy, saying that it is about time someone did something, and more importantly, that someone cared enough to do something.
However, the company said in an SEC filing that it intended to answer all of CFPB’s allegations, saying that the company “… continues to believe that its acts and practices relating to student loans are lawful and meet industry standards and, where applicable, the statutory contractual requirements of NSI’s other regulators.”
It’s hard to tell what the future holds for Navient or the borrowers. However, Consumerist suggests that student loan companies will be increasingly under the microscope as student loan debt tops $1.3 trillion.
If you are drowing in student loan debt, now would be the time to talk to our student loan lawyers about your options.