Student Loan Servicer Navient Criticized For Practices

Attorney Ed WoodsNavient is a publicly-traded student loan servicer familiar to many Americans with student loan debt. The company formally split off from Sallie Mae and contracts with the U.S. Department of Education to service and collect upon student loan accounts. Now, the company is being criticized in an audit conducted by the U.S. Department of Education.

What Did the Audit Report About Forbearance?

The audit was conducted in 2017 but is just now being released to the public. Navient is accused in a series of lawsuits with steering borrowers into higher cost repayment plans in order to boost its profits. In particular, Navient is criticized over the use of student loan forbearance. Forbearance allows student loan borrowers to defer payments for a period of time.

However, interest on the loan still accumulates during forbearance and it can be costlier for the borrower over time. For example, a borrower with $30,000.00 in student loans and who is granted forbearance for 36 months (the maximum allowable time) would end up paying about $6,742.00 in additional interest. The U.S. Consumer Financial Protection Bureau has alleged that Navient’s improper use of forbearance has cost borrowers almost $4 billion in interest between 2010 and 2015.

The audit revealed that Navient employees, while speaking with borrowers, failed to discuss options other than forbearance which might be a better deal for the borrowers. For example, one option that might be better for a borrower is a repayment plan based on the borrower’s current income. This allows the borrower to make affordable payments (instead of making no payments at all) and thereby avoid incurring additional interest charges. This option may be better because it costs the borrower less over time.

The criticism is that Navient representatives simply don’t take the time or the effort to really help a borrower select an option that’s truly best for the borrower. It’s easier to simply put the borrower in forbearance and move on to the next borrower.

How Many People Have Been Affected?

The audit did not reveal how many borrowers may have been affected by the alleged improper practices. Navient says that they service about 6 million accounts and that approximately 12.7% of those accounts are 30 or more days past due. That equates to about 762,000 borrowers struggling with their student loan debts. If one in ten of those borrowers was put in forbearance instead of an income-based repayment plan, then 76,200 borrowers could have been affected.

Navient disputes the allegations in the lawsuits filed against them. According to the company, the number of their borrowers in an income-based repayment plan is in line with other student loan debt servicers. The company also maintains that it is paid less, not more, for borrowers who are put in forbearance.

Contact a Trusted Bankruptcy Lawyer to Get Ahold of Your Student Loan Debt

Regardless of whether Navient has engaged in the improper practices for which it stands accused, this situation keenly illustrates the critical importance of accurate and personalized information about student loan repayment options. If you are struggling with student loan debt (or any other debt), our attorneys can help you with a personalized review of your situation. We will sit down with you and discuss your situation with you. During that discussion, we will identify and discuss all your options to finally and permanently resolve all your debt. Please contact us to schedule your consultation.

Share This Page

Bond & Botes Law Offices

At Bond & Botes, we now offer full service bankruptcy consultation and filing over the phone or by video from the comfort and safety of your home or office. Please call 1-877-581-3396 or click here to setup your free phone or video consultation.

The lawyers at the Bond & Botes affiliated offices serve clients at offices in Anniston, Birmingham, Mobile, Montgomery, Opelika, Decatur, Huntsville, Florence, Haleyville and Gadsden, Alabama; Vicksburg, Hattiesburg and Jackson, Mississippi. Read our disclaimer here. You can view our Privacy Policy here.

Alabama Offices

Birmingham

2107 5th Avenue North
Age-Herald Building
Birmingham, Alabama 35203
Phone: (205) 802-2200


Shelby County Location
15 Southlake Lane, Ste 140
Birmingham, AL 35244
Phone: (205) 802-2200


Florence Location
121 S. Court Street
Florence, AL 35630
Phone: (256) 760-1010


Huntsville Location
225 Pratt Avenue NE
Huntsville, AL 35801
Phone: (256) 539-9899


Montgomery Location
311 Catoma Street
Montgomery, AL 36104
Phone: (334) 264-3363


Decatur Location
605 Bank Street
Decatur, AL 35601
Phone: (256) 355-2447


Haleyville Location
914 19th St.
Haleyville, AL 35565
Phone: (205) 486-3580


Gadsden Location
430-B Chestnut Street
Gadsden, AL 35901
Phone: (256) 485-0195


Opelika Location
216 South 8th Street
Opelika 36801
Phone: (334) 887-7666


Anniston Location
1302 Noble St #2C
Anniston, AL 36201
Phone: (256) 344-3559


Cullman Location
200 Second Avenue SW
Cullman, AL 35055
Phone: (256) 739-9866


Mississippi Offices

Jackson Location
5760 I-55 North, Ste 100
Jackson, MS 39211
Phone: (601) 353-5000


Hattiesburg Location
607 Corinne St, Ste B8
Hattiesburg, MS 39401
Phone: (601) 264-7200


Vicksburg Location
1212 Farmer Street
Vicksburg, MS 39180
Phone: (601) 353-5000

© 2024 by Bond & Botes Law Offices. All rights reserved. Disclaimer | Privacy Policy