Navient is accused of overcharging borrowers and violating their rights.
The CFPB has been working with the Department of Justice, the New York Department of Financial Services, and state attorneys general to investigate the shadier aspects of higher education. It sent a Notice and Opportunity to Respond and Advise (NORA) letter to Navient as part of the process by which a company can attempt to dissuade them prior a lawsuit being issued.
For a company that depends on the government for profit, Navient’s business practices have not been above reproach. They already were in trouble with the FDIC for conning borrowers into paying late fees and had to pay out $78 million to settle the issue.
With $1.2 trillion in outstanding student debt, student loan debt is the second most common form of debt behind mortgages.
The Department of Education (DOE) has promised to better oversee Navient. Senators who reviewed DOE oversight feel that it previously has been too lax.
“We continue to work closely with CFPB and other federal agencies to protect student loan borrowers,” said Dorie Nolt, a DOE spokeswoman. “We’ve made a variety of changes to improve loan servicing, and we’re constantly monitoring our servicers. We won’t hesitate to take action against a servicer that isn’t following the law.”
What’s Navient?
While banks do loan money to students, the DOE is the best place to go for a good interest rate. But you don’t pay them back. You pay back Navient.
Sallie Mae, an organization the government created to handle student loans, was privatized, like the venerable Fannie Mae and Freddie Mac. To make more money, Sallie Mae spun off its student loan arm and called it Navient, which isn’t BBB accredited.
How did the student loan situation get so bad?
When the only way to get a good job short of breaking bad is to go to college, the price went up astronomically from the days when working as a bartender in the summer could pay it.
The Great Recession exacerbated the problem. Since many states can’t legally run a deficit to boost their economies, they cut higher education, causing tuition to soar. Thus, many student took out loans to make up the difference.
What’s being done about student loans and Navient?
Many agree it’s terrible to saddle Millennials with thousands of dollars of debt at the beginning of their lives. It prevents them from buying houses and starting families. President Obama has tried to address the issue. In fact, part of the Obamacare bill was language that helped student borrowers.
With the CFPB is working on the issue, there’s hope for improvement.
