A group of more than two dozen state attorneys general has accused Navient Corp. (formerly known as Sallie Mae), America’s largest student loan firm, of violating state laws to ban abusive or unfair practices by paying call center workers based on how fast they could get struggling borrowers off the phone.
This comes after a two-year investigation that began in late 2013, during which were analyzed more than 4,000 consumer complaints, thousands of Navient documents, and recorded calls between borrowers and call center workers. The allegations have been described as “devastating” by officials, calling into question the company’s ability to provide basic customer service to over 12 million American student loan borrowers.
The investigation found that Navient inappropriately steered borrowers in need of help to plans which temporarily defer payments rather than towards White-House promoted income-based plans which could have eventually led to debt forgiveness. This tactic was not only to get borrowers off the phone faster, but would also allow student loan balances to grow during the period of deferment and was cheaper and easier for Navient. According to a 2006 Education Department study, borrowers who use temporary deferment plans are more likely to default on their federal student loans and should not be the first option for struggling borrowers.
Officials have also accused Navient of failing to inform certain borrowers of their eligibility for student loan forgiveness based either on disability or because their school defrauded them or abruptly closed down.
The findings of this investigation were shared with Navient in mid-April with the intention of reaching a settlement, but so far, the company has yet to formally respond.
This is not the first time that Navient has been accused of mistreating borrowers. In recent years, the Department of Justice, federal banking and consumer regulators, and state prosecutors have also turned their attention to the company to investigate complaints. Navient has denied any wrongdoing. Now, the state attorneys general are demanding reforms aimed at improving customer service and ensuring that borrowers are being made aware of their options.
The Consumer Financial Protection Bureau says that is has found enough evidence to support a lawsuit against the company for cheating borrowers.
Atlas Consumer Law has years of experience helping struggling student loan borrowers handle their debt. For more information on how we can help, please contact a Chicago debt relief attorney at our firm for a consultation.