CFPB Calls BS on Navient’s Claims It Doesn’t Have to Provide Best Advice

If you know anyone who has a student loan serviced by Navient, you should warn them about this article.

Navient was sued by the Consumer Financial Protection Bureau (CFPB) for failing student loan debtors in a number of areas.

One of the areas of contention was the CFPB position that although debtors were directed back to Navient for best advice on how to deal with their loans, Navient provided bad advice which harmed consumers.

Navient’s position in response was they had no duty to provide good advice to help debtors. In fact that’s a position they’ve argued time-and-time-again.

One of the latest documents filed in the lawsuit by the CFPB is the response by the CFPB that Navient’s position is BS.

When it comes to a responsibility to not string debtors along by providing poor advice the CFPB says, “Navient does not dispute the sufficiency of the Bureau’s allegation that Navient took “unreasonable advantage” of borrowers experiencing long-term financial hardship. Navient benefited from decreased operating costs by steering consumers into forbearance, before or instead of income-driven repayment (“IDR”) plans.” – Source

The CFPB also stated, “Navient repeatedly encouraged distressed borrowers to contact the company for advice and guidance about repayment options that were most suitable for their situation. Navient repeatedly made public statements such as “Contact us … and let us help you make the right decision for your situation.” Borrowers reasonably relied on Navient to do what it promised.” Silly borrowers!

The heart of this matter is if you think it is reasonable or required that people rely on the advice given by Navient or any student loan servicer. Should the advice given be complete and appropriate? Post your comment here.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

It’s not unreasonable to make a logical assumption that Navient representatives were aware of all options to help borrowers who called in for advice. But if you assumed that, you would be wrong. Navient even argues, “that despite publicly promising to help distressed borrowers understand alternative repayment plans, it had no obligation to do so. (asserting that there is “no expectation” that Navient will “‘act in the interest of the consumer’”).”

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The CFPB tries to make the case debtors were duped, harmed, and fooled by Navient and alleges, “borrowers reasonably, but mistakenly, trusted and relied on Navient to act in their interest because Navient told them it would do so.”

A long time ago I thought Navient could be counted on to provide good advice to debtors. But over-and-over that has not only not proven to be true but the failure of Navient representatives to provide best advice has costs consumers years of payments, tens of thousands of dollars in additional debt, and more emotional strife.

I’m now of the opinion that if you owe Navient you should get a third-party opinion if you are on the best repayment plan or option. One person to contact would be my friend and debt coach Damon Day.

From the CFPB’s response, “Navient does not dispute the sufficiency of the allegations that Navient’s steering practices caused substantial injury in the form of significant costs to borrowers, such as the addition of massive amounts of unpaid interest to the principal balance of borrowers’ loans, and that such injury was not outweighed by countervailing benefits to consumers or competition.”

At this point it will be a race to see if the CFPB can continue to fight this case or the Trump administration and Republicans in Congress will succeed in their efforts to gut the CFPB before this battle with Navient is resolved. Politicians feel the CFPB is overreaching in its efforts to defend consumers against abusive financial practices and want the CFPB to go away so it can go back to profit over consumers.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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