The federal government is suing student loan servicing giant Navient, the off shoot of Sallie Mae, claiming that they systematically misled, cheated, and deceived student loan borrowers. The government claims that Navient’s actions resulted in many borrowers making more payments than necessary and harming the credit of vulnerable borrowers such as people with disabilities and military veterans. The federal government is seeking restitution for borrowers and financial penalties on the company.
Navient is disputing the charges. Chief executive Jack Remondi said his company had a strong record of fighting for the borrower despite the outrageously complicated student loan process. Remondi gave the Washington Post some examples of instances where Navient had sought policy changes that may have made it easier for borrowers to enroll in income-driven repayment plans. The only thing standing in the way of those initiatives, as Remondi sees it, was the federal government.
Remondi said the problem with student loans today isn’t the servicer and terms. The problem lies in a generation of students graduating without attractive and well-paying career options. These graduates are left feeling their education didn’t have the value they paid for, and repayment becomes less of a priority.
Despite Remondi’s insistence that borrower complaints aren’t actually related to the actions of Navient, there has been an onslaught of consumer complaints against the servicer since the lawsuit has surfaced. Many more borrowers have come forward with stories that seem to add up to evidence for the government’s case.
There’s no doubt that Remondi raises some very serious concerns with the overall state of the federal loan department. Critics of the lawsuit claim that it is politically motivated to mask the shortcomings of the Obama administration’s Department of Education. By filing a lawsuit now, some say the former administration is casting a shadow over any chance to pin the blame of the current student loan debt crisis on their shoulders.
The fact remains that Navient and its private student loan lender predecessor Sallie Mae have faced numerous investigations into their service practices since 2005. The FDIC investigated a subsidiary bank in 2007. In 2008, the Education Department determined that Sallie Mae overcharged the government to the tune of $22.3 million. As recently as 2014, the company settled an investigation by the FDIC and the Justice Department of overcharging military families for ten years.
Although we’ll have to wait and see what the courts decide, it’s likely that both sides are telling a portion of the truth. Navient and Sallie Mae have made mistake after mistake over the years. It’s reasonable to guess that they made enough mistakes handling student loans to warrant the lawsuit. But even if that were true, it would not make Remondi’s comments about the complexity of the student loan system any less valid. The government has added more and more repayment plan terms in an attempt to make repayment easier while missing the underlying point: borrowers will not prioritize their student loans until they are gainfully employed. Besides, the added plans have made the process more complicated, which means more borrowers are left in confusion.
It is yet to be proven whether or not Navient’s student loan servicing practices caused an undue burden on borrowers. However, that doesn’t mean that we can’t learn a lesson from the proceedings. There are a number of ways that you as a borrower can protect yourself from potentially untrustworthy loan servicers.
Pay Online - Automatic payments will help you avoid late fees and eliminate the possibility of items being “lost in the mail,” misfiled, or applied to the wrong account. Besides, you may save money on your insurance rate. Paying online also means you have a clear record that you can refer back to.
Research Your Options - Be proactive and don’t rely on your student loan service provider for information regarding the options you might qualify for. Student loan repayment option information is available in lots of places online, so you can double check the information you are given by your loan servicer for accuracy. You can also look into refinancing your student loans which will allow you to obtain a new servicer.
Write it Down - Calling your student loan service provider might be faster and easier, but it doesn’t give you a written record of exactly what the conversation was about. Unless you are recording these conversations, communicating through email can be just as fast.