One Of America’s Biggest Student Loan Providers Is Getting Sued
One of America’s biggest student loan providers, which held $300 billion in student loan servicing rights as of 2014, was sued Thursday by Pennsylvania’s attorney general.
Josh Shapiro, Pennsylvania’s attorney general, filed the lawsuit against Navient for administering predatory loans and directing debtors to expensive repayment plans, reported The Washington Post.
“Navient repeatedly engaged in misleading practices meant to boost their profits at the expense of Pennsylvania students,” said Shapiro in a statement obtained by WaPo. “They crossed the line in pursuit of profit, and we’re here to change their behavior and help the people who’ve been harmed.”
Shapiro asserted that Pennsylvania residents have complained more than 1,000 times to the Consumer Financial Protection Bureau regarding Navient’s practices. Pennsylvania residents owe a total of nearly $62 billion when accounting for both federal and private student loans. The average resident holds $33,264 in debt, an amount eclipsed by averages in only two other states: Delaware and New Hampshire.
Shapiro alleges that Navient and its former parent company Sallie Mae made “risky and expensive” loans to students with interest rates peaking at almost 16 percent. The complainant also argues that the two companies loaned to students at schools with 50 percent graduation rates, lessening the likelihood that the students would subsequently graduate and be able to pay off their loans.
“The case was filed without any review of Pennsylvania residents’ customer accounts,” said Navient in a statement obtained by WaPo. The company labeled the lawsuit “completely unfounded.”
“We comply with the rules that govern the student loan program as set by Congress and the Department of Education, and there are no allegations that we have violated these rules,” said the loaner. “We will provide the facts in court as we continue to provide industry-leading service to our customers.”
Average student debt upon graduation from college grew at a rate over two times as high as that of inflation from 2004-2014.
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