Consumer Financial Protection Bureau Sues Country’s Largest Student Loan Servicer For Misleading Borrowers
Although its power may change after Trump takes office, the Consumer Financial Protection Bureau (CFPB) is taking action while it can against the largest student loan servicer in the country, Navient. The CFPB has filed a lawsuit against the student loan company claiming it has abused borrowers’ rights.
“Navient, a former part of Sallie Mae that services more than $300 billion in federal and private student debt, stands accused of creating ‘obstacles’ for borrowers by providing bad information, incorrectly processing payments and not acting on borrower complaints,” reported Forbes. By doing so, the CFPB says Navient “illegally cheated borrowers out of lower repayments.” Navient has been charged by the CFPB for repeatedly misapplying or misallocating borrower payments and this “obscured” information borrowers needed.
CFPB director Richard Cordray said in a statement, “Too many borrowers paid more for their loans because Navient illegally cheated them and today’s action seeks to hold them accountable.”
Meanwhile, Navient categorically denied the CFPB’s allegations.
“The allegations of the Consumer Financial Protection Bureau are unfounded, and the timing of this lawsuit — midnight action filed on the eve of a new administration — reflects their political motivations,” the company said in a statement. “[T]he suit improperly seeks to impose penalties on Navient based on new servicing standards applied retroactively and applied only against one servicer. The regulator-asserted standards are inconsistent with Department of Education regulations, and will harm student loan borrowers, including through higher defaults.”