Politico is reporting Navient “ramps up pressure to get the bureau to drop a separate suit against it. According to an official familiar with the meeting, Remondi met with Eric Blankenstein, the top political appointee for the CFPB’s enforcement division and other career staffers.”
More in the Navient lawsuit can be found here.
Navient has previously claimed they have no duty or responsibility to provide best advice to student loan debtors.
California has announced they are having none of that.
The California Attorney General Xavier Becerra announced that he will be filing a lawsuit this week against Navient Corporation (Navient) and its subsidiaries, Pioneer and General Revenue Corporation, for misconduct in the servicing and collection of federal student loans. Navient services approximately $300 billion in federal and private student loans held by 12 million borrowers. An estimated 1.5 million Navient borrowers live in California.
“Navient exploited every family’s dream of witnessing our children graduate from college. Our families are now facing a student loan debt crisis. America’s college students owe $1.5 trillion in outstanding student loans — more than the entire amount Americans owe in credit card debt. It’s $123 billion in federal student loan debt in California alone,” said Attorney General Becerra. “Navient’s loan servicing abuses have compounded the misery of parents and students who sacrificed to pay for college. Our students can’t afford to be cheated out of any more money than they legally owe simply because Navient knew how to game the system. We are ready to hold Navient accountable.”
In the lawsuit, Attorney General Becerra will allege that Navient, which contracts with the federal Department of Education to service federal student loans, violated California’s Unfair Competition and False Advertising Laws by:
- Steering vulnerable borrowers toward more expensive repayment plans;
- Failing to adequately disclose how students could attain income-driven repayment recertification;
- Misrepresenting the order in which it would apply overpayments;
- Misrepresenting the “present amount due” to delinquent borrowers; and
- Failing to properly discharge the federal student loans of borrowers with a total and permanent disability.
In the lawsuit, Attorney General Becerra will further allege that Navient’s subsidiaries, Pioneer and General Revenue Corporation, also violated California’s Unfair Competition and False Advertising Laws. Once a borrower defaults on his or her student loan, the loan is typically assigned to a private firm for collection. Navient has assigned thousands of California student loans to its subsidiaries, Pioneer and General Revenue Corporation. Attorney General Becerra will allege that Pioneer and General Revenue Corporation:
- Misrepresented to borrowers the credit benefits of rehabilitating defaulted loans;
- Provided false information as it relates to collection fees on rehabilitation; and
- Inaccurately told borrowers that disability loan forgiveness required a permanent inability to work, when in fact no such stringent requirement existed.
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