If you’ve been following along with the mess that is Tuition Answer private student loans serviced by Navient, there is an update.
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In 2016 I wrote at length about the misinformation Navient was giving consumers about Tuition Answer private student loans.
As I said in this post, Navient was telling investors the loans might not be protected in bankruptcy but continued to collect on them after consumers filed for bankruptcy. That felt like an oops way back then.
In March 2017, an Adversary Proceeding was filed, Homaidan v. Sallie Mae.
In the initial complaint filed, the Plaintiffs said, “For the last ten years, SLM Corporation, Sallie Mae. Inc., Navient Solutions LLC and Navient Credit Finance Corporation (“Defendants”) have been engaged in a massive effort to defraud student debtors and subvert the orderly working of the bankruptcy courts. Specifically, Defendants have been originating and servicing dischargeable consumer loans and disguising them as non-dischargeable student loans. Defendants have done this in order to discourage debtors from seeking their constitutional right to relief under Title 11 of the Bankruptcy Code and to allow creditors to continue to collect on discharged loans after a debtor’s bankruptcy. In order to effectuate this illegality, Defendants have appropriated a legal presumption for a class of debt that they know is not entitled to that presumption, thereby using the authority of the bankruptcy courts to cloak their fraud in the color of law and escape detection. Defendants are willfully and maliciously engaged in a pattern and practice that they know subverts the proper workings of the bankruptcy process. Plaintiff brings this action to enforce his rights and the rights of those similarly situated under the law.” – Source
So let’s flash forward to now. On October 17, 2022 the United States Bankruptcy Court Judge ruled “Navient is restrained and enjoined from taking any acts to collect on Tuition Answer Loans held by the Plaintiffs and the Putative Class Members, as the class is described in the Amended Complaint, that exceed the cost of attendance as defined by Internal Revenue Code § 221(d), and that have an outstanding balance subject to collection.
In view of the pendency of this Court’s Temporary Restraining Order, which was entered on July 6, 2022, and has been in effect since September 6, 2022, Navient has had reasonable and sufficient time to implement compliance measures, and this Memorandum Decision and the accompanying order shall be effective immediately.” – Source
The Judge also said, “The Plaintiffs have shown a likelihood of success on the merits of their claim that their private Tuition Answer Loans that exceed the cost of attendance do not meet the nondischargeability requirements of Bankruptcy Code Section 523(a)(8)(B), and are therefore within the scope of their bankruptcy discharges. And the Plaintiffs have shown a likelihood of success on the merits of their claim that Navient received notice of their bankruptcy discharges, and intended the acts that violated the discharge to collect on these discharged debts – that is, that Navient has violated the statutory bankruptcy discharge injunction as to the Plaintiffs and the Putative Class Members.”
My tuition answer loan was added on my bankruptcy, and discharged in 2022. The loan came off of my credit report, and I got no bills for about 7 months. A few months ago, it got added back on and they have been trying to collect. Not sure why I wasn’t included in the injunction or if there’s something I need to do to get added
Hello. I have also been impacted and as of January 2023 I can no longer access my account and they are asking the cosigner for a payment much larger than the one I previously was paying. I have called and they have advised about this case and say that the cosigner is responsible. If my loan has been discharged in the bankruptcy, I don’t think the cosigner would have been responsible then. This is not making sense and I am unsure if I should start making the payments now in the cosigner’s name. Furthermore they sent my 1098 to the cosigner. The cosigner has never made a single payment. This is also been removed from my credit report, any help I appreciate. Is there a phone number to contact for this eastern district court? The agent at navient also told me I signed up for this which is not true
Your discharge does not relieve the co-signer—two separate responsible parties. If your obligation to pay has been eliminated then they will go after the next responsible party.
this doesn’t help anyone more than likely involved in this case.so ultimately it’s a waste of time prob for 90% of us that are included in it. we all needed a co-signer to get the student loan. no matter what are helpless with relief now that they’re transferred to the co-signer. i guess the co-signer would have to file for bankruptcy also ?! at this point my mother is willing to do it to get rid of these loans.
Brittany,
I have the same issue with the 1098 tax form. And after talking to a tax advisor there is nothing Navient or us can do about it. The issue is that the 1098 is issued to the primary borrower per IRS tax codes, who as of January 2023, is the co-signer on the loan. Just like you, my co-signer has never made a payment however now that they are listed as the primary borrower, then will get the 1098 form and get to use the interest paid on their taxes. It’s all one big mess that will go on for years it seems.
Same boat – Shonda
I went on the Navient website today, 1/11/2023, and my Tuition Answer Loans are completely gone, like they never existed. I called Navient and they said they couldn’t talk to me; that they could only talk to my co-signer and that we would be getting letters in the mail. My only question is what happens to the co-signer? Is the co-signer now responsible for the loan since I had a bankruptcy discharged in 2019? Then again, why would the co-signer be responsible if the judge is saying that Navient was wrong in issuing a loan that exceeded the cost of attendance anyway. I guess this is all to be continued ….
There are not clear answers on this while it remains in litigation. It’s not like they won’t give you an answer. The answer is that nobody knows what is going on and how this will end.
Steve,
My tuition answer loans are still being collected by Navient even though a TRO was issued. I called them and they told me there was no change in my account, and that I still need to pay each month. I do have a complete bankruptcy back in 2013 and the only thing I can think of is the clause that states “cost of attendance” verified by the IPEDS. I have a four-year post-graduate degree. Can you clarify if the cost of attendance is for the total degree, or does it go by a yearly basis or even a semester by semester calculation?
Thanks again for all that you do!
It sounds like you should talk to the people at https://www.acsmithlawgroup.com/