U.S. Consumer Agency Sues Navient Over Student Loan Repayments
U.S. Consumer Financial Protection Bureau (CFPB) sued Navient over its student loan practice. At the same time, Illinois Attorney General also file charges against the company along with Sallie Mae for a similar suit.
CFPB filed a lawsuit on Wednesday, Jan. 18, as reported by Reuters. The agency accused Navient of failing borrowers at every stage of repayment in a systematic and illegal way. Navient was sued for providing bad information to its student borrowers, proposed payments incorrectly and failed to fix problems which people complained about.
Navient was part of Sallie Mae, the company that provides financial services, mostly student loan service. Sallie Mae separated its loan service operation business into separate entities Navient on April 30, 2014. Currently, Navient manages about $300 billion of loans to 12 million customers.
The company has been under scrutiny by the CFPB for years. The consumer protection agency has been examining the company's business practice since 2013. After two years long investigation, they annnounced in 2015 to have found sufficient evidence that Navient violated the consumer protection law.
Consumer Financial Protection Bureau filed the lawsuit against Navient to U.S. District Court for the Middle District of Pennsylvania last Wednesday. Citing the company has violated the Fair Credit Reporting Act and Fair Debt Collection Act.
In Illinois, the state's Attorney General Lisa Madigan also filed similar lawsuit as reported by CBS. Attorney General sued Navient and Sallie Mae for unfair treatment to student borrowers from start to finish. The lawsut stated the company involved in the aggressive and widespread subprime lending which led to tens of thousands of bad loans in the state of Illinois.
Madigan said that both companies made billions of dollars from the loans with very high interest rates and fees. The loans were even granted to students who went to some of the worst school in Illinois.
"Navient entered into an agreement with schools to pay the company for some of those defaults so that Navient did not have to shoulder all of the losses," Madigan said. "Meanwhile borrowers were left with the lifetime of the debt that they were unable to pay."
Watch the report regarding the lawsuit against Navient and Sallie Mae from Illinois Attorney General below: