The Consumer Financial Protection Bureau is Suing Navient, the Largest Student Loan Company in the United States

Breaking: The Consumer Financial Protection Bureau is suing Navient, the country’s largest student loan company, for “failing borrowers”

— Molly Hensley-Clancy (@mollyhc) January 18, 2017

Per CFPB Director Richard Cordray:

“For years, Navient failed consumers who counted on the company to help give them a fair chance to pay back their student loans. At every stage of repayment, Navient chose to shortcut and deceive consumers to save on operating costs. Too many borrowers paid more for their loans because Navient illegally cheated them and today’s action seeks to hold them accountable.”

Navient used to be part of Sallie Mae, but it is now a publicly traded company, up 81.84% over the last year, and 28% since Donald Trump was elected president.

Navient oversees the loans of more than 12 million people, with over half of that coming from contracts it has with the Department of Education, totaling over $300 billion in loans.

The CFPB alleges that Navient

– Consistently misapplied or misallocated payments.

– Steered borrowers into forebearance when it was not needed (which allows people to take a break from paying loans while interest continues to pile up).

– Did not alert borrowers to verify their income and family size—which enables some to keep payments low.

– Misreported to credit reporting companies that disabled borrowers—including severely harmed veterans—defaulted on their loans, when the federal Total and Permanent Disability discharge program ran a loan forgiveness program for those individuals.

– Deceived private student loan holders about requirements to release their co-signer from the loan, so when they prepaid monthly installments in advance, Navient reset the counter to zero, making them start over at the exact moment they were getting out in front of their debt.

Per PBS NewsHour, four out of every ten CFPB complaints from March 2012 to October 2016 came against Navient, with no one else even in the same ballpark.

Shahien Nasiripour reported in the Huffington Post last year:

The U.S. Department of Education conducted a bogus investigation into allegations that student loan giant Navient Corp. violated its lucrative government contract, leading the Obama administration to mislead the public last year when it proclaimed the company didn’t cheat servicemembers on federal student loans, according to an audit by the department’s inspector general released Tuesday.

And thanks to the department, which had contradicted federal prosecutors with its announcement, Navient not only kept its contract — it got a raise, too.

The Department of Education seems to have been complicit in these alleged crimes, as in 2013, investigators discovered that Navient clearly violated their contract with the government by overcharging servicemembers on their federal student loans, yet the Department renewed the loan servicing contract only months after this revelation. The Department of Justice agreed to a $60 million settlement with Navient the following year, and as has become the standard in these cases, Navient did not have to admit to wrongdoing, despite forking over a boatload of cash for doing…well…something. A former official at the federal consumer bureau said that hundreds of thousands of troops had made over $100 million in student loan payments they were exempt from, so Navient came out at least $40 million ahead if that assertion is true, and again, the fact that Navient settled sure makes it look that way. This is the literal definition of crony capitalism.

The reviews of Navient on Consumeraffairs.com corroborate these allegations, as Navient has a one star rating (out of five) based on 147 ratings in 499 reviews as of this writing. The reviews read similarly to the CFPB lawsuit, as Christina of Virginia Beach provided a screenshot of her account being paid off, writing two weeks ago:

I open my email this morning to find that I am “late” on my payment. I am not quite sure how this could be as I pay my bill early every time. When my payments were started the first payment was due 2/1 and I made that payment in January. Fast Forward to now and I am being told that they did not receive my January payment… How can this be when you clearly received a payment in December for my loans.

Something is very wrong with this company. They are lacking transparency when it comes to how payments are applied. There is nowhere where you can see any balance going down and if you ask for a statement showing this for some reason no one understands what you are asking for. They advise you to look at your payment history which only shows your payment being received not how it is applied or that your balance has gone down. I’m so over this company and their complete disregard for doing business in a reputable manner. It makes me wish I would have never gone to school.

“It makes me wish I would have never gone to school.” That sentence sent chills down my spine. Melissa of Hoffman Estates, IL wrote on December 28th of last year:

This company purchased my student loan which was being paid efficiently and regularly paid via the ACS website. Then when it went to Navient they split the loan into two separate loans which are impossible to pay online with one payment. When you call Navient their automated system takes roughly 15 minutes of begging to be connected to a human to get past because it cannot help me within the system. Actually it disconnected me once because it “couldn’t understand me” and I had to start over. With today’s technology, these things should be easy. It has worked so simply and easy since 2004 with ACS. Now it’s a source of contention and anxiety just to pay a bill every month. Unacceptable.

Mark of Gulf Breeze, Florida ended my dive through these reviews, as I nearly threw my computer out the window, and kept telling myself over and over that these are unverified accounts, despite their similarity to the more formal allegations contained in the CFPB lawsuit.

I have been trying for 7 months to secure a discharge of my sons student loan and reimbursement for payments made since his passing. I have completely fulfilled all of Navients requests for documentation… Including certified mailings of certified death certificates. Yet every time I contact them for an update, representatives (located in philippines) tell me they never received, or another form is needed or they’ll contact me via email with their findings!!! It’s a constant run around!!! NO MORE! They are simply trying to avoid the loan discharge and reimbursement. Which is totally against the law. Death of a student is a legal and legitimate cause… as stated on the US Department of Education website. I will no longer call them and will be turning this over to my attorney. BEWARE, ANYONE CONSIDERING USING NAVIENT FOR A SCHOOL LOAN. They can not be trusted.

So to recap: a company which used to be an arm of the federal government designed to help kids pay for college is now a publicly traded company, and has faced and settled allegations ranging from old fashioned fraud, to lying and stealing from wounded military veterans—all while their stock price skyrocketed once these cases were resolved, shooting up even further once our new Kleptocrat-in-Chief was elected. Granted, whenever the word “allegation” is involved, we should all hold back our outrage, but given the fact that Navient has already made a payout to the DOJ, and that these new allegations bear a striking resemblance to those before them, the burden of proof is on Navient to demonstrate that they are not the sub-human predatory scumbags that all the smoke around this case suggests they are.

Jacob Weindling is Paste’s business, media, and politics editor. You can follow him on Twitter @Jakeweindling.

UPDATE: Within a half hour of this story posting, Navient’s Vice President of Corporate Communications sent me the following statement, requesting to update the story:

Navient rejects CFPB ultimatum to settle by Inauguration Day or be sued

Navient will not agree to false assertions and practices that would hurt consumers

WILMINGTON, Del., Jan. 18, 2017—Navient, the nation’s leading loan management, servicing and asset recovery company, today issued the following statement on legal action filed against it today:

The allegations of the Consumer Financial Protection Bureau are unfounded, and the timing of this lawsuit—midnight action filed on the eve of a new administration—reflects their political motivations. Navient welcomes clear and well-designed guidelines that all parties can follow, and we had hoped our extensive engagement with the regulators would achieve this objective. Instead, the suit improperly seeks to impose penalties on Navient based on new servicing standards applied retroactively and applied only against one servicer. The regulator-asserted standards are inconsistent with Department of Education regulations, and will harm student loan borrowers, including through higher defaults.

Navient has a well-established, superior track-record of helping student loan borrowers succeed in repayment.

· 49 percent of loan balances serviced by Navient for the federal government are enrolled in income-driven repayment plans. Assertions that we do not educate borrowers about IDR plans ignore the facts.

· Navient is a leader in advancing policy recommendations to streamline enrollment and reenrollment in income-driven plans—reforms which we believe would make a meaningful difference for millions of Americans with student loans.

· Federal borrowers serviced by Navient are 31 percent less likely to default than their peers at other servicers. Private loan delinquencies and defaults are at among historic lows.

· In 2009, Navient pioneered the first private education loan modification program. The program was designed to help customers stay current on their loans and, unlike federal program solutions, make progress on repaying their principal balance. Today, more than $2 billion in loan balances are enrolled in these programs.

Navient has a responsibility to its customers, shareholders, and employees to defend itself—publicly and in court—against this unsubstantiated, unjustified and politically driven action. We cannot and will not accept agenda-driven ultimatums designed to get headlines rather than help for student borrowers. We will vigorously defend against these false allegations and continue to help our customers achieve financial success.

Navient will post additional information at navient.com/facts.

Of the statistics provided above by Navient, not a single one came with any independent sourcing. The 31% figure linked to an article on Navient’s website with no author listed, and the rest were simply just text.