New Jersey AG files a lawsuit accusing student loan giant Navient of “unscrupulous” practices
the legal action, filed in Essex County’s Superior Court, argues that Navient “is unselfish business practices, fraudulent behavior, and misrepresentation in servicing thousands of student loans from New Jersey consumers.” The lawsuit also states that Navient violated New Jersey consumer protection laws.
“Higher education should be a path to success, not a path to financial ruin,” Grewal said in a Press release.
Navient denies the allegations, insisting that it helps the borrowers rather than taking advantage of them. “These recycled baseless allegations are not only baseless, Navient has consistently provided excellent service to student loan borrowers and helped millions of people see the benefits of higher education and successfully pay off their loans,” Navient spokesman Paul Hartwick said in a statement opposite Yahoo Finance.
“As a service provider for the federal government, we have cited registration for affordable payment plans and reduced default rates. In fact, more than half of the loan portfolio we manage is paid back on an income-related basis, ”added Hartwick.
“Put corporate profits above the best interests of the borrower”
In June, nearly 170,000 New Jersey state borrowers had serviced $ 7 billion of their state student loan debt from Navient. The company also handles private student loans for New Jersey borrowers. Nationally, 44 million borrowers owe $ 1.54 trillion in student loans, according to the New York Fed.
Grewal said borrowers were struggling with student loans before the coronavirus pandemic because “their loan service providers put corporate profits above borrower’s best interests.”
In suing the loan administrator, “we are taking steps to hold one of the largest student loan administrators in the country responsible for the abuses that have put borrowers in New Jersey worse off,” he added.
The case stems from an investigation by the state consumer association. The lawsuit states that the department has “received, directly and indirectly, approximately 1,000 consumer complaints from New Jersey borrowers about Navient’s business practices related to student loan servicing.”
Borrowers complained that they were being steered into forbearance instead of income-oriented repayment plans. unsealed Court documents from last Octoberr show the same behavior at national level; Forbearance has been urged internally as the “optimal solution,” wrote an executive director of Sallie Mae, the former parent company of Navient, in an internal memo in 2010.
They also complained that they were not informed of the correct deadline for completing the annual papers in order to maintain these repayment plans, that they faced major hurdles to exempt loan co-signers from a loan, and that they were wrong too Information was given about how much to pay a loan default status.
Mike Pierce of the Student Borrower Protection Center, a DC nonprofit, stated in a tweet that Grewal isn’t the only one taking on the student loan giant.