21 May How Can Student Loan Forgiveness Lawsuits Affect Me?
For thousands of former college students across the US, the issue of paying back student loans is a big one. For someone who is thousands of dollars in debt, Navient student loan forgiveness might sound like a way out from under their financial burden. But many people who reached out to Navient for help still haven’t gotten a resolution. Instead of getting their debt erased, they’re now dealing with lawsuits that take up more money and time.
What Is Navient?
A student loan servicer is a company that collects payments, responds to customer inquiries, and provides guidance to borrowers. They work with borrowers on getting multiple loans consolidated, reducing their payment plans, and, in some case, getting their student loans forgiven altogether. The student loan servicer disburses money from federal loans, accepts applications, and processes any changes that occur throughout the life of the loan. Navient is one of the largest student loan servicing companies in the country.
The most popular type of student loan forgiveness for federal loans is income-driven repayment (IDR). For those who qualify, the person makes payments based on their income for 20 to 25 years before having their debt forgiven altogether. People who work in certain fields might qualify for debt forgiveness after only ten years. Since IDR is a federal program, it only applies to federal loans.
For students with private loans, negotiating lower payments and using loan assistance programs are options. These programs can lower or eliminate a person’s student loan debt. The large majority of people who apply to Navient to have their private student debt lowered or forgiven don’t qualify.
There are some potential avenues for private borrowers such as employer-based programs. Some cases have been thrown out due to missing paperwork where the lender couldn’t prove the borrower owed the money. The number of private loans that are forgiven for any of these reasons is minimal. It’s more likely that a person will have their loans forgiven due to the inept or fraudulent handling of the loan company.
The Impact of the Navient Lawsuits
There is a student-loan debt crisis in this country, and it’s affecting a large portion of citizens. Recent college graduates are finding fewer high-paying jobs while owing more in college loan debt than ever before. It’s causing them to put off decisions like buying homes or cars or getting married and starting a family.
It isn’t surprising that college students are looking for ways to reduce their debt. Promises of paying less or having their debt wiped cleaned have led many of them to apply with Navient student loan forgiveness. But for many applicants, the outcome has ended up being an even bigger expense.
In 2017, the U.S. Consumer Financial Protection Bureau (CFPB) and attorneys general in Illinois and Washington filed lawsuits against Navient. These lawsuits allege that the company caused harm to borrowers who were making payments in several ways, including:
- Misallocating payments
- Providing unclear information to clients about re-enrolling in income-driven repayment plans
- Failing to explain how to qualify for a co-signer release
- Steered borrowers toward multiple forbearances instead of income-driven repayment plans
The Illinois and Washington suits claim that the company made subprime loans when they were part of Sallie Mae. Navient has filed motions to dismiss the lawsuits. Meanwhile, students are waiting without a resolution for the three cases which might take years to play out. But that isn’t the totality of the lawsuits made against Navient.
In 2018, California’s attorney general Xavier Becerra announced that the state was suing Navient. Like the suits in other states, California based this one on their belief that Navient had failed to service borrowers’ student loan debt properly. To date, Pennsylvania and Mississippi have also brought suits against the company.
In addition, members of the American Federation of Teachers filed a lawsuit against the company. They are one of the largest teachers unions in the country.
The Lawsuit that Fell Apart
At the end of President Barrack Obama’s administration, the government’s top consumer regulator was negotiating a settlement with Navient. Once President Trump won the election, the talks between CFPB and Navient broke down. This was prior to the filing of lawsuits by Washington and Illinois. State attorneys general are concerned that the actions against Navient will be shut down completely by the government.
After Navient had expressed their willingness to reach a settlement with their borrowers following a 3-year investigation by the Bureau, things changed once Trump was inaugurated. Not only have the talks fallen apart, but the lawsuits are, as a result, still going on today.
Students don’t choose their own loan servicers, and many don’t realize who their loans are with. Many people struggling with student debt don’t realize their loans are with the company. But if you have student loans, there’s a good chance they’re serviced by Navient. Since the company broke off from Sallie Mae, they have gained more than 12 million customers and service over $300 billion in both government and private student loans.
How Navient Harmed Borrowers
Many borrowers who sought Navient student loan forgiveness as a means to ease their student loan debt were instead misdirected into student loan repayment and forbearance. These programs don‘t qualify for Public Service Loan Forgiveness. Instead of acting in the borrowers’ best interests, as expected according to their government contract, the company acted in a way that would allow them to collect more fees.
People who would qualify for loan forgiveness due to their area of work ended up paying millions of dollars that they shouldn’t have. Those in education, medical care, and other public servants paid the price for the company’s greed.
The bottom line is that there is no such thing as a Navient student loan forgiveness program. Borrowers aren’t likely to get a resolution to these lawsuits in the near future, either. Another option might be one of the government’s student loan forgiveness programs. But applying takes diligence and the majority of applicants aren’t approved. For borrowers who must pay high amounts each month, the minimum ten years’ of payments it takes to qualify for some programs doesn’t give them much hope either.
Is Navient the Only Company Getting Sued?
These problems occur with companies other than Navient. It is just one of eight loan servicing companies paid by the US Department of Education to handle payments from student borrowers. Similar problems with these other companies make refinancing a poor option for many. Even if they’re willing to take a chance on a different company, refinancing eliminates a borrower’s eligibility for income-driven repayment plans or forgiveness programs.
The amount of money involved in these suits is gigantic. If the company loses the lawsuits, they might have to pay back billions of dollars in damages. Navient says on its website “We are here to help you successfully navigate paying your student loans.” But the company admitted in court that those assurances are nothing more than marketing hype. A lawyer representing the company even referred to the lingo as “puffery” and not a legal obligation.
How Do I Find Out if My Loan Is Federal or Private?
There are two ways to find out if your student loan is private or federal. The first is to access the National Student Loan Data System at https://nslds.ed.gov/nslds/nslds_SA/. This is the Department of Education’s central database for student aid. They have all the information about loans and grants so borrowers can access all their data on a single platform. The website provides a lot of information including:
– Your federal loans, grants, and overpayments
– Status of your current enrollment
– Status of subsidized loans
– Answers to frequently asked questions
The second way to find out what kind of loans you have is to contact your loan processor. If Navient is your loan servicer, they must tell you the truth about your loans. The bad news is that not only are there zero Navient student loan forgiveness programs, but there also aren’t government forgiveness programs for private loans either.
What to Do if You Have a Federal Student Loan from Navient or Another Student Loan Servicer
If Navient is your loan servicer and the lawsuits have you worried, you aren’t alone. There’s no way to predict the outcome of the lawsuits and what they will mean for you. There is still a good chance that they are servicing your loans exactly as they should be. However, it’s up to you to pay attention to any problems and take steps to have them solved. Some things you can do include:
- Change Loan Servicers – Although it is possible, it isn’t always the best option. You didn’t choose your loan servicer and the only way you can do so now is by refinancing to a private loan or consolidating your federal loans. Even if you do this, there’s no guarantee you’ll have your new loan financed through a different loan servicer. This option could also end up costing you more in payments.
- Know Your Loan Options– Learn more about refinancing, forbearance, and what they might mean for you. Know your current interest rates and how they will change if you refinance.
- Speak Out About Your Concerns– Monitor your credit report, keep track of student loan payments, and seek answers any time you find something that doesn’t seem right. Ask questions about anything on your statement that you don’t understand.
- Keep Your Records– Track your credit score and read your statement thoroughly each month. If there’s anything you don’t understand, ask. Also, save any notices you receive about changes to your loans. Changes could mean you have more or fewer options. They might make a difference in which option is best for your situation.
- File a Complaint to the CFPB– If you find problems with your loan, contact the CFPB directly. You can also file a complaint directly with Navient. Considering the scrutiny the company has come under over the last few years, they should be happy to address any of your concerns. If you don’t get satisfaction from them, file a complaint with the Department of Education.
- Consider a Student Loan Modification– While Navient student loan forgiveness isn’t a real option, some borrowers qualify for a reduction in their student loan debt through a student loan modification. It isn’t the right solution for everyone, but for many candidates, it’s a good way to get their debt reduced, or forgiven entirely.
Student loan debt is at an all-time high. Many graduates are struggling with financial debt due to fraud or being misled by the lenders and the loan servicers. Some graduates believe they have great options for job placement. Others are misled or coerced into taking larger loans for their education than they really needed.
Financial debt can have a significant impact on your credit and every aspect of your life. It might seem like there’s no way out. For many borrowers caught up in the crisis, student loan modification is a better way out.
How Does Student Loan Modification Work?
The criteria determining eligibility for a student loan modification is broad. Those who face an undue hardship due to their loan debt might qualify. Other criteria include:
- Not graduating
- Being misled about potential job placement
- Acquiring a disability
- The borrower was a minor when committing to the loan
- They feel trapped in an abusive loan contract
- Has deferred payments or requested forbearance options because they can’t afford to pay
- They were misled about forgiveness options
Student loans are difficult for borrowers to understand, along with the programs offered to help with their debt. It’s important to understand your options and the criteria for getting debt relief from your student loans.
Getting Started With Iron Fist Legal
At Iron Fist Legal, we provide better options for students carrying overbearing student loan debt. We can help you reduce your student loan principal balance by 30 to 70%, guaranteed. You might qualify for a balance reduction or a complete cancellation of your loan. To get started, you just fill out the online Student Loan Debt Evaluation form.
Contact us with your questions. You may have better options for eliminating your student loan debt than you think!