Ah yes, the wonderful power elite, who get rich by cheating their customers, proving how worthy they are of their riches.
by Martha C. White
Jan. 19, 2017
Navient, the nation's largest student loan servicer — and formerly part of Sallie Mae — was just hit with a federal lawsuit that alleges the company deceived borrowers to the tune of $4 billion.
Customers who took out student loans were hit with unnecessary interest payments, denied options to reduce their debt, and suffered damage to their credit scores, according to a lawsuit from the Consumer Financial Protection Bureau filed on Wednesday.
It's one of the Bureau's last actions before the transition to a GOP-led administration — one that has made no secret of its desire to defang or outright eliminate the regulator, which was put into place following the financial crisis to put oversight to all aspects of the financial services industry under one umbrella.
The CFPB sued Navient Corporation, along with subsidiaries Navient Solutions and Pioneer Credit Recovery. Altogether, the company services the student loans of more than 12 million borrowers, roughly half of whom are under a contract with the U.S. Department of Education.
Just between 2010 and 2015, the CFPB said Navient collected $4 billion in interest alone from pushing students into "forbearance" — that is, their payments were suspended but the debt continued to grow — rather than enrolling them in income-based repayment programs for which they were eligible.
Borrowers who were disabled and suffered financial hardship — including injured and disabled veterans who were trying to earn a degree — had their loans reported to credit bureaus as in default rather than discharged, devastating their credit score.
On Wednesday, the Attorneys General of Illinois and Washington also filed suit against Navient, claiming deceptive and predatory practices in the company's loan servicing and collection activities.
"My investigation found Sallie Mae put student borrowers into expensive subprime loans that it knew were going to fail," Illinois Attorney General Lisa Madigan said in a statement. Her suit also included Sallie Mae Bank and General Revenue Corporation, a collection agency and another subsidiary of Navient.