Feds sue largest student loan servicer in the U.S., alleging it cheated borrowers


On Wednesday, the Consumer Financial Protection Bureau sued Navient Corp., the country's largest servicer of student loans, claiming the company violated several acts and went out of its way to cheat borrowers.
"For years, Navient failed consumers who counted on the company to help give them a fair chance to pay back their students loans," CFPB Director Richard Cordray said in a statement. "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, formerly part of Sallie Mae, services private and federal loans worth more than $300 billion for more than 12 million borrowers.
The CFPB alleges that Navient misapplied or misallocated borrowers' payments, and incentivized customer service representatives to push borrowers into forbearance as opposed to income-based repayment plans, which racked up additional interest charges of up to $4 billion from January 2010 to March 2015. The agency also claims Navient violated the Fair Credit Reporting Act, the Fair Debt Collections Practices Act, and the Dodd-Frank reform act, and allegedly told credit reporting agencies disabled Americans defaulted on their loans, when really they were discharged under a special program, the Los Angeles Times reports. Navient called the allegations "unfounded."
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Catherine Garcia has worked as a senior writer at The Week since 2014. Her writing and reporting have appeared in Entertainment Weekly, The New York Times, Wirecutter, NBC News and "The Book of Jezebel," among others. She's a graduate of the University of Redlands and the Columbia University Graduate School of Journalism.
-
Does depopulation threaten humanity?
Talking Points Falling birth rates could create a 'smaller, sadder, poorer future'
-
New White House guidance means federal employees could be hearing more religious talk at work
The Explainer Employees can now try to persuade co-workers of why their religion is 'correct'
-
Real-life couples creating real-deal sparks in the best movies to star IRL partners
The Week Recommends The chemistry between off-screen items can work wonders
-
Samsung to make Tesla chips in $16.5B deal
Speed Read Tesla has signed a deal to get its next-generation chips from Samsung
-
FCC greenlights $8B Paramount-Skydance merger
Speed Read The Federal Communications Commission will allow Paramount to merge with the Hollywood studio Skydance
-
Tesla reports plummeting profits
Speed Read The company may soon face more problems with the expiration of federal electric vehicle tax credits
-
Dollar faces historic slump as stocks hit new high
Speed Read While stocks have recovered post-Trump tariffs, the dollar has weakened more than 10% this year
-
Economists fear US inflation data less reliable
speed read The Labor Department is collecting less data for its consumer price index due to staffing shortages
-
Crypto firm Coinbase hacked, faces SEC scrutiny
Speed Read The Securities and Exchange Commission has also been investigating whether Coinbase misstated its user numbers in past disclosures
-
Starbucks baristas strike over dress code
speed read The new uniform 'puts the burden on baristas' to buy new clothes, said a Starbucks Workers United union delegate
-
Warren Buffet announces surprise retirement
speed read At the annual meeting of Berkshire Hathaway, the billionaire investor named Vice Chairman Greg Abel his replacement