Posted on June 27, 2019 in Business Law
Navient Corporation is a student loan servicer based in Delaware. According to a recent lawsuit filed on behalf of students who have been harmed by Navient, the company engaged in abusive practices that were financially harmful to borrowers, costing them billions of dollars. A spokesperson from Navient said that the allegations were unfounded and the company made a motion to dismiss the lawsuit. U.S. District Judge Robert Mariani denied the motion, which means that the case will proceed.
Highlights of the Lawsuit
The lawsuit against Navient includes the following claims:
The company made predatory loans to students who were attending for-profit and non-profit colleges that had graduation rates that were below 50 percent. Navient knew that a high percentage of these students would not be able to repay the loans.
Navient increased its subprime lending, ignoring the fact that the loans would most likely default at very high rates.
Navient urged students to apply for short-term loan forbearances. Unlike loan deferments, the interest continues to accrue and adds to the loan’s principal. This should only be used as a short-term solution for students who are having a temporary problem making payments.
This is not the first lawsuit filed against the company. Three other states have filed lawsuits against Navient as well.