If you have a student loan, there’s a good chance you know who Navient is. As one of the largest student loan servicers in the United States with over $300 billion in federal and private loan servicing portfolios, they’re often a household name for those with student loan obligations. What you might not know is that they’ve been around a lot longer than you think – and seem to be gaining notoriety for all the wrong reasons.
Who is Navient?
Navient started under its current name in 2014 but has been around since 1973 as the Student Loan Marketing Association. The SLMA was nicknamed Sallie Mae and over the next few decades Sallie Mae became the premier student loan lender and servicer – at least until it recently got caught engaging in some illegal practices.
In 2014 the Department of Justice charged Sallie Mae and its in-house loan servicing unit of knowingly and purposefully violating the Service members Civil Relief Act. American military troops serving in Iraq and Afghanistan were seeing their loan payments processed in such a way as to maximize late fees – which made Sallie Mae a great deal of money and also broke laws designed to protect deployed troops from that exact scenario. The affected borrowers were paying more than they should have been under the law.
Sallie Mae agreed to pay $139 million in settlements to the affected troops, and their loan servicing unit broke off from them in 2014, naming themselves Navient and setting up shop independently. As a servicer only, Navient doesn’t grant loans, but it does collect payments, set up repayment plans, and act as the liaison between student borrowers and their lenders.
Navient's Repayment Options
The company offers several repayment options for borrowers, including a standard repayment plan that has a 10-year term with a fixed monthly payment (minimum $50). Other options include an extended repayment, available to students with more than $30,000 in student loan debt, allowing for a term of up to 30 years with fixed or variable payments. Their graduated repayment plan is geared to increase payments every two years and grow with your income as you advance in your career field.
Navient also offers financial hardship relief through unemployment deferment if you are out of work or working less than 30 hours per week; the plan stops your payment obligation for up to 3 years. An economic hardship deferment offers the same terms for those who are financially unable to make their payments. However, interest continues to accrue during the deferment period, which means you’ll end up paying back a larger amount.
Navient Follows in Sallie Mae's Footsteps?
In January 2017, Navient found itself the target of multiple lawsuits alleging that it had defrauded thousands of borrowers over a period of years reaching back to when it was part of Sallie Mae, well into its independent operation. According to the lawsuits, Navient misapplied payments (or didn’t apply them at all), and put students having a tough time making payments into multiple forbearances and deferments instead of working out an income-driven plan – resulting in interest continuing to accrue and total loan balances skyrocketing.
Perhaps most disturbing about the lawsuits is that students who found themselves victimized by Navient’s practices could not change servicers. In most cases, if a consumer finds out that a company is acting in bad faith they can simply take their business elsewhere; as the Consumer Financial Protection Bureau points out, not so with student loans.
The lawsuits remain ongoing; at least one of them is a class action suit alleging a long list of illegal conduct on the part of Navient, including:
- Purposefully making it difficult for borrowers to pay back their loans.
- Allowing lawyers to approach borrowers with fake debt resolution services when they had problems making their payments.
- Lying to borrowers about their student loan status, letting them think it was paid in full, then hitting the borrowers with late fees when they stopped making payments.
Those borrowers who complained to Navient, according to the Consumer Financial Protection Bureau, were ignored. Story after story of cheated borrowers continue to rise to the forefront of media coverage.
For its part, Navient denies the allegations and says the charges are politically motivated. Meanwhile, the CFPB’s website has logged over 11,000 complaints against Navient and its practices.
What Does All of This Mean?
As a student borrower it’s almost impossible to control who your loan servicer is. It is possible, says student loan expert and attorney Adam Minsky, to switch servicers through a process of refinancing or consolidating, but there’s no guarantee that borrowers would find a better servicing situation than what they left.
Regardless of who your loan servicer is, you should be paying very close attention to your loan payments and balance. Here’s a short list of actions you can take to protect yourself against any type of servicer fraud:
- Check your loan balance and payments every month – or even more often if necessary. Make sure your payments are being applied correctly and that your outstanding balance reflects those payments.
- If you plan to consolidate, make sure you understand any potential effect on your overall balance and interest rates. Get that information in writing before you sign up for it.
- Don’t be afraid to call or otherwise contact your servicer and ask repeatedly for all of your options, including the ones that may not make as much money for the servicer.
- If you feel you’re being unfairly charged or subjected to corrupt business practices, report your servicer to the Consumer Financial Protection Bureau.