In January of this year, in news that surprised almost nobody, the CFPB, which is a part of the federal government, along with the Illinois and Washington attorneys general, sued Navient, the nation’s largest provider of student loan servicing. Navient was spun off of the federal government entity Sallie Mae in 2014. The plans for this were announced in 2013, and it was completed the following year. Navient is now a publicly traded company that trades under the ticker symbol NAVI.
The allegations by the CFPB are that Navient “systematically and illegally [failed] borrowers at every stage of repayment,” including:
- created obstacles to repayment by providing bad information;
- processed payments incorrectly;
- failed to act when borrowers complained;
- illegally cheated many struggling borrowers out of their rights to lower payments, which caused them to overpay for their student loans;
- deceived private student loan borrowers about requirements to release their co-signer from the loan; and
- harmed the credit of disabled borrowers, including severely injured veterans
My favorite thing about this lawsuit is that the CFPB is alleging that since at least January of 2010, Navient steered borrowers away from income-based repayment plans and into forbearance. These are pretty serious charges, if true. However, let’s think about this timeline. The charges are that Navient has been engaging in this type of behavior since 2010. From 2010 to 2014, Navient was a part of the Federal Government. Then, for no apparent reason in 2013, the government decided to spin off Navient into a private company. In 2017, that same Federal Government decides to sue Navient. I know that this may surprise some of you, but I think that just maybe someone pretty high up in the government got wind of these allegations and made the decision to spin them off before they decided to file a lawsuit. Call me crazy, but doesn’t this seem just a little suspicious to you?
The bad news doesn’t stop there for Navient, though. This week, Haeggquist & Eck, a shareholder rights litigation firm, has decided to investigate the alleged violations further. My guess is that they are prepping for a class-action lawsuit against the company. We will see how ugly this thing gets, but in the end, I guarantee you that the only entity that will get away from this thing without a blemish on its record is the federal government.