Washington, D.C. – Today, the Consumer Financial Protection Bureau and state attorneys general took vigorous action against the largest student loan company in the country, Navient, formerly known as Sallie Mae. The CFPB’s complaint alleges failings by Navient at every step of the loan repayment process, leading to significant financial harm for student loan borrowers.
Rohit Chopra, Senior Fellow at the Consumer Federation of America, and formerly the Assistant Director & Student Loan Ombudsman at the Consumer Financial Protection Bureau, made the following statement:
“When student loan borrowers make a mistake, companies hold them accountable with immediate penalties and negative credit reporting. But too often, it seems that those same companies have immunity when they break the law. Those days appear to be over.
Today’s lawsuits by the CFPB and state Attorneys General are full of deeply disturbing allegations. Like the Wells Fargo fake account scandal, Navient allegedly incentivized employees to push borrowers into forbearance plans, instead of helping them sign up for affordable repayment options. If true, this means that the company’s actions may be leading to excessive interest charges and unnecessary defaults.”
The lawsuit also details improper payment processing practices, wrongful credit reporting for disabled veterans, and deceiving borrowers who were in default.
Chopra added, “For too long, nation’s largest student loan company has been running roughshod over student loan borrowers. While it’s sat at the top of the list when it comes to consumer complaints, it’s been at the bottom of the list when it comes to customer service. According to Department of Education data, the newly-named company has lagged at the back of the pack when it comes to borrower service – usually dead-last — in every quarterly survey of borrowers.
With its long history of regulatory run-ins, from the student loan kickback scandal a decade ago to the more recent military family overcharging scheme, the time for accountability is long overdue.
Today’s actions by the CFPB and the states are a major step in restoring integrity and competition in the student loan industry. This is welcome news for millions of student loan borrowers and honest student loan companies that follow the law.”
Contact: Rohit Chopra, email@example.com
The Consumer Federation of America is an association of more than 250 non-profit consumer groups that, since 1968, has sought to advance the consumer interest through research, education, and advocacy.