Members of the American Federation of Teachers, the second largest teachers union in the U.S., filed a lawsuit against Navient, one of the the nation’s largest student loan servicers.
If you have a student loan, there is a good chance that it may be serviced by Navient. Navient, which spun off from Sallie Mae, has more than 12 million customers and services more than $300 billion of government and private student loans.
Here’s what you need to know and the action you can take.
Navient Lawsuit: The allegations
The lawsuit alleges that Navient systematically misdirected borrowers into student loan repayment programs and types of forbearance, which do not qualify for Public Service Loan Forgiveness, which enables public servants to have their federal student loans forgiven after meeting certain requirements.
The lawsuit also alleges Navient ignored borrowers’ best interests — in violation of its government contract — to prevent borrowers from moving to FedLoan (the student loan servicer that administers the Public Service Loan Forgiveness program), so that Navient could continue to earn fees.
As a result, the plaintiffs claim that teachers, nurses, first responders, social workers and other public servants are paying millions of dollars more than they otherwise should in student loan payments.
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“Navient has purposely and systematically trapped teachers, nurses and other public service workers under a mountain of student debt instead of providing them with accurate information about their loan options,” Randi Weingarten, president of the American Federation of Teachers, said.
The Public Service Loan Forgiveness Program is a federal program that forgives federal student loans for borrowers, including teachers, who are employed full-time (more than 30 hours per week) in an eligible federal, state or local public service job or 501(c)(3) non-profit job who make 120 eligible on-time payments.
Navient declined to comment on the lawsuit, which was filed in U.S. District Court in the Southern District of New York.
Navient has been sued by five states, including California, Illinois, Pennsylvania, Washington and Mississippi, who have alleged improper actions on behalf of student loan borrowers.
This follows action from the Consumer Financial Protection Bureau (CFPB), which sued Navient in January 2017 for allegedly “systematically and illegally [failing] borrowers at every stage of repayment,” including:
- created obstacles to repayment by providing bad information;
- processed payments incorrectly;
- failed to act when borrowers complained;
- illegally cheated many struggling borrowers out of their rights to lower payments, which caused them to overpay for their student loans;
- deceived private student loan borrowers about requirements to release their co-signer from the loan; and
- harmed the credit of disabled borrowers, including severely injured veterans
Action Plan: 5 Steps
When it comes to your student loans, the ball is in your court:
1. Know your student loan options
One role of your student loan servicer is to help you understand your available options with regard to your student loans, including:
- Student Loan Refinancing
- Federal Student Loan Consolidation
- Income-Driven Repayment Plans
- Student Loan Forgiveness
When it comes to student loan repayment, it’s best to conduct your own independent research, rather than rely on your student loan servicer to give you all the answers.
2. Monitor the latest student loan developments
There may be several changes to your student loans in the coming years. This may include changes to student loan repayment and student loan forgiveness, among others, including a potential end to public service loan forgiveness.
3. Keep records
Keep an organized record of all your student loan payments, including any correspondence with your student loan servicer. It is best to communicate in writing with your student loan servicer.
4. File a complaint
If you feel you have been wronged by your student loan lender or your student loan servicer, you can make your voice heard by sending a formal complaint to:
- U.S. Department of Education
- Consumer Financial Protection Bureau
- Your lender
- Your servicer
5. Pay Off Your Student Loans Faster in 2018
One of the best ways to avoid dealing with student loan servicers is not to have one.
These free student loan calculators can help you understand your student loan repayment options.
You can also take these simple steps to pay off your student loans faster in 2018.