Education Dept. Shruggs Off Predatory Behavior Of Major Loan Servicer *NAVIENT
Navient isn't offering all of the best options to borrowers, an education department audit found. Think Progress, Nov. 21, 2018. Navient, the third largest student loan servicer in the country, directed borrowers toward higher cost repayment plans and did not offer better options, according to a 2017 audit by the U.S. Department of Education. The department did not make requirements or sanctions and simply offered recommendations for the company.
The Associated Press obtained a copy of the audit from Sen. Elizabeth Warren’s (D-MA) office. It was not shared with plaintiffs in federal and state lawsuits against the student loan servicing company. Washington, Mississippi, California, Pennsylvania, and Illinois are suing the company, alleging that its action breaks consumer protection laws. The Consumer Financial Protection Bureau’s (CFPB) lawsuit has said Navient's actions were deceptive.
For the audit, the department listened in on 2,400 calls to borrowers from 2014 to 2017. Nearly one out of 10 calls featured a representative who did not offer all of the options they could have offered, such as income-based repayment options. These representatives did not ask questions to find out if the borrower would have benefited from such a plan, according to the audit.
The CFPB’s lawsuit has said Navient’s actions were deceptive and that between 2010 and 2015, the company added around $4 billion in interest to those borrowers’ loans through overusing forbearance. When loans are in forbearance, they still accumulate interest and are more costly to the borrower in the long term. In its lawsuit, the CFPB said Navient’s compensation policies for customer service representatives incentivizes these practices. It compensates them on average call time, and employees know that lengthy conversations, as ones about someone’s full financial picture tend to be, would be detrimental to them, the suit argues.
..Navient defended itself to the AP by saying that for nine of 10 of those calls, borrowers were offered all of their options and that its record is about the same or better than other student loan companies. But that doesn’t say much for Navient, considering that many student loan servicers fail borrowers. In 2015, the Consumer Financial Protection Bureau released a report on borrowers’ experiences with student loan servicers that found that servicers failed to proactively mention income-based repayment plans when borrowers were struggling to make payments. Instead servicers often suggested forbearance or deferment or simply insisted borrowers make the full payment on their loans.
Navient’s actions could be affecting as many as 76,200 borrowers, the AP reported. -READ MORE...
https://thinkprogress.org/education-department-says-navient-steered-people-into-higher-cost-student-loan-repayment-d763acfa537a/
US Secretary of Education Betsy DeVos attends the Congressional Medal of Freedom ceremony in the East Room of the White House, Washington, D.C. on Friday, Nov. 16, 2018.
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