Obama’s Consumer Financial Protection Bureau is suing Sallie Mae for cheating borrowers
With about 24 hours left in Barack Obama’s presidency, we have learned that the agency he and democrats created to help police Wall Street and protect consumers from fraud, the Consumer Financial Protection Bureau is suing student loan giant Navient Corp., formerly known as Sallie Mae.
According to a report in BuzzFeed News, “The country’s largest student loan company is being sued by the Consumer Financial Protection Bureau, which alleges in a sweeping lawsuit that the company misled students, bungled payment processing, and “cheated” borrowers out of lower repayment rates in favor of its own bottom line.”
Navient services loans for 12 million student borrowers that amount to $300 billion in loans. In a press release, the Consumer Financial Protection Bureau said that one in four Americans who owe student loans has Navient as their servicer. And the company has a contract with the Education Department to service 6 million federal student loans which mean that the company essentially acts as the link between the government and student loan borrowers.
In their report, BuzzFeed News reports that:
The CFPB’s lawsuit, filed today, seeks financial relief for millions of student borrowers — a sum that could potentially reach billions of dollars, officials said in a press call.
The suit alleges a raft of violations, including systematically misprocessing payments and misleading borrowers. It claims Navient damaged the credit scores of students whose loans had been discharged — a group of borrowers with permanent disabilities that includes veterans with disabilities, the CFPB said.
Among the most serious allegations is the claim that Navient systematically pushed struggling borrowers away from income-based repayment plans and into a quick, short-term solution known as forbearance, potentially costing consumers money more in interest while saving Navient time and paperwork. Forbearance is designed for borrowers facing a brief period of financial hardship, not those who are in long-term financial distress.
“Navient chose to subvert its obligations as a servicer in favor of shortcuts,” said Richard Cordray, the CFPB’s director.
The lawsuit against the student loan giant represents what will essentially be one of the final acts of the Obama Administration.
