Recent college graduates are leaving school with an average of $34,000 in student loans. But one of the nation’s largest student loan companies, Navient, claims in a lawsuit that it doesn’t have a fiduciary responsibility to help people manage their loans.
“It's a completely remarkable and stunning response by a servicer who is paid millions,” said Adam Minsky, a Boston-based lawyer who specializes in student loan disputes.
Navient is one of several providers hired by the U.S. Department of Education to service student loan payments for millions of college students. The company’s CEO John Remondi has repeatedly said publicly the company’s job is to help its customers manage their student loans. But according to a lawsuit filed back in January by the Consumer Financial Protection Bureau, the company was doing just the opposite.
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“Kicking people off plans, not processing forms fast enough, steering people into the wrong programs and providing misinformation and bad advice that got borrowers into a lot of trouble,” Minsky told NBC Boston’s Jason Frazer.
About one in four borrowers struggle to pay their student loans. According to Consumer Financial Protection Bureau, Navient purposely mislead its customers and cost them $4 billion.
“When you take the authority of someone's money, I think you should have the responsibility to explain what you're doing with it,” said Chandler Baillargeon, a Boston University student who has student loans.
For several months, Navient’s CEO John Remondi has refuted the allegations. During an investor’s call, he said the company goes beyond what’s legally required.
"It's inconceivable and disappointing that these very helpful services would be portrayed as harmful. The irrefutable facts are that Navient service borrowers are more likely to be enrolled in alternative payment plans."
But in response to the government’s lawsuit, lawyers representing the company claimed “there is no expectation that the servicer will 'act in the interest of the consumer.'"
Patricia Nash Christel, a spokesperson for Navient, told NBC Boston, “As the nation's leading student loan servicer, Navient helps more than 12 million borrowers navigate loan repayment through proven solutions that fit their individual circumstances. Our job as a student loan servicer is to help borrowers understand the options available to them so they can make an informed choice about what’s best for them. And it's working: borrowers we service are 31 percent less likely to default and 49 percent of loan balances we service for the government are enrolled in income-driven repayment plans.”
So what should customers do to protect themselves?
“Keep good records. Followup. Get objective information from an outside source. You can't rely on customer service agents from Navient,” said Minsky.
The company denies any wrongdoing and wants the lawsuit to be dismissed.