The Government Sues Sallie Mae For Cheating Borrowers Out Of Repayment Plans
For years, Sallie Mae has been a thorn in the side of millions who borrowed money in hopes of earning a college education. However, it seems as if the complaints of many have finally been made valid. On Wednesday, (Jan. 18) the federal government leveled a lawsuit against Navient, formerly part of Sallie Mae, for a bevy of unsavory practices including cheating borrowers out of repayment plans.
"At every stage of repayment, Navient chose to shortcut and deceive consumers to save on operating costs," said Richard Cordray, the director of the Consumer Financial Protection Bureau, which spearheaded the lawsuit.
In 2014, Navient spun off from Sallie Mae and is currently the largest student loan agency in the nation, handling 12 million accounts half of which are federal and the other half private. The CFPB's lawsuit alleges that as far back as 2010, Navient steered borrowers into paying more than they had to, misallocated borrowers payments and in some cases falsely reported a borrower defaulted on their loans, which was then reported negatively on his or her credit score.
Navient issued a statement denying the claims.
"The suit improperly seeks to impose penalties on Navient based on new servicing standards applied retroactively and applied only against one servicer."
The lawsuit also claims Navient made it especially difficult for borrowers to enroll in an income-based repayment plan, which lowers their monthly payment because it required less staff resources and paperwork. Instead, Navient insisted borrowers enter forbearance in which they could temporarily stop making payments, but still rack up interest.
The CFPB is seeking money for the borrowers who have been hurt by Navient's services, as well as civil penalties.
Never been so elated in all my days.