Alexander J. Douglas, Esq. | Attorney | (585) 568-2224 | alex@lawroc.com

Federal Government Sues Navient for Collection Violations

Recently, the Consumer Financial Protection Bureau (CFPB), the main federal regulator of debt collectors and financial organizations, sued Navient in federal court for extensive mistakes and violations relating to its debt collection behavior. The CFPB also sued one of Navient’s largest debt collection companies, Pioneer Credit Recovery, Inc. The attorneys general in Washington and Illinois joined the lawsuit.

Some people might not recognize the name Navient, but they almost definitely have heard of Sallie Mae. Sallie Mae spun off Navient several years ago to operate as its debt collection arm of the company. Navient oversees the collection of billions of dollars’ worth of student loans, both federally insured and private.

If you fall behind on your federally insured student loans, federal law guarantees you the right to enter into an “income-based repayment” (IBR) program, where you can make monthly payments on your loans for a small percentage of your income.

According to the lawsuit, Navient employees steered consumers away from entering into these beneficial programs.  In addition to steering borrowers away from these plans, the CFPB also accused Navient of neglecting to inform borrowers of the deadlines for their IBR plans, forcing millions of their borrowers to fail to renew their plans on time. As a result, their loans went back into traditional payment in full, where some consumers had to pay several thousand dollars a month.

Also, the CFPB accused Navient of applying consumers’ payments incorrectly, sometimes applying the payments to student loans which were accruing a lower rate of interest, and leaving the accounts with the higher rate untouched.

These are just some of the accusations leveled against Navient by CFPB. Navient has been a huge player in the student loan field for several years now.

We here at Gesund & Pailet stand ready to help consumers who are having problems with their student loan collectors.

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