Student Loan Giant Navient Sued by California Attorney General for Allegedly Cheating Borrowers
Navient, the Delaware-based student loan management corporation formerly known as Sallie Mae, is being sued by California’s Attorney General Xavier Becerra. In a suit filed Thursday, Becerra accused Navient, the nation’s largest student loan servicer, of cheating thousands of borrowers and forcing them to repay more than they owed.
Becerra’s suit alleges that borrowers were steered toward repayment plans that exceeded their income levels, and that in some cases, Navient misrepresented how much borrowers owed. When forced to pay more than they owed, many borrowers then defaulted on their student loans. “By taking Navient to court, we’re sending a very strong message that these practices will not be tolerated,” he said before the filing, according to the San Francisco Chronicle.
Navient’s CEO Jack Remondi called the charges “unfounded.”
Roughly 1.5 million Navient borrowers live in the state of California and carry $123 billion of the nation’s $1.5 trillion student debt.
Navient has previously been sued by the U.S. Consumer Financial Protection Bureau for alleging putting the company’s interests ahead of its borrowers, who were encouraged to take on forbearance agreements rather than income-based repayment plans.
Amid regulatory scrutiny, the embattled loan servicer fell off the Fortune 500 this year. It is expected that by next year, under current Secretary of Education Betsy DeVos, a new student loan servicing and processing system will be established.