December 12, 2024

Congressional Investigation Reveals Navient May Be Improperly Denying Borrowers Relief from Predatory Student Loans

Lawmakers Seek Action from Regulators to Protect Borrowers from Navient’s “Disgraceful” Behavior

“We are concerned that Navient’s cancellation process for borrowers who attended predatory, for-profit schools is flawed and opaque and potentially violates federal consumer protection law.”

Text of Letter (PDF)

Washington, D.C. — U.S. Senator Elizabeth Warren (D-Mass.) and Congresswoman Madeleine Dean (D-PA) led 24 lawmakers in sending a bicameral letter to Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra and Federal Trade Commission (FTC) Chair Lina Khan, revealing the results of their investigation into Navient regarding its cancellation process for the predatory, for-profit student loans in its portfolio and urging the agencies to hold the student loan servicer accountable for any violations of federal law. 

The investigation revealed that Navient may be improperly denying thousands of borrowers relief from loans that the company pushed onto students that attended fraudulent for-profit colleges. These loans are eligible for cancellation due to Navient’s own misconduct, and thanks to the Holder Rule, which allows borrowers to raise claims and defenses against a loan holder. But, according to the elected officials, the school misconduct discharge process Navient has set up to cancel these debts is flawed and insufficient.

“Navient has admitted it is responsible for canceling ‘all loans that meet the Holder Rule criteria,’ but the convoluted process the company has set up for defrauded borrowers is flawed and may be improperly denying borrowers relief,” wrote the lawmakers. “We urge the CFPB and FTC to investigate this matter and act to ensure that Navient is complying with federal law and providing relief to the defrauded borrowers harmed by its misconduct.”

Earlier this year, Senator Warren launched an investigation into Navient and the set of private, predatory student loans it pushed onto students likely to default — colluding with fraudulent for-profit colleges in exchange for a steady supply of federal and private loan borrowers. In its response to an initial letter from Senator Warren and other lawmakers, Navient agreed to cancel all loans that meet Holder Rule criteria.

But the investigation released today revealed that:

  1. Only a fraction of Navient’s borrowers who attended for-profit colleges have been sent school misconduct discharge applications — and Navient denies relief to 80% of those who apply.
  2. Navient’s school misconduct discharge application is unnecessarily burdensome and confusing.
  3. Navient’s rationales for denials are opaque and its appeals process is insufficient, making it impossible for borrowers to exercise their rights.
  4. Navient appears to be making incorrect categorical determinations about which school and loan types are eligible for cancellation under the Holder Rule.
  5. Navient’s misconduct alone provides a basis for loan cancellation—a fact which Navient has repeatedly ignored.

“It is disgraceful that Navient appears to be evading its responsibility to cancel this fraudulent debt by rejecting 80% of applicants, inaccurately determining which loan and school types are eligible for cancellation, providing insufficient information when it does reject borrowers, and neglecting its responsibility to cancel all private fraudulent debts based on the Holder Rule and Navient’s misconduct,” wrote the lawmakers.

The lawmakers pushed CFPB Director Chopra and FTC Chair Khan to take supervisory and enforcement action as appropriate.

“We ask your agencies to use their supervisory and enforcement authority to ensure Navient is delivering borrowers the relief they are entitled to under the Holder Rule and due to Navient’s own misconduct,” the lawmakers concluded.

The following Senators signed on in support of this letter: Richard Blumenthal (D-Conn.), Jeff Merkley (D-Ore.), Bernie Sanders (I-Vt.), Tina Smith (D-Minn.), Peter Welch (D-Vt.), Ron Wyden (D-Ore.).

The following Representatives signed on in support of this letter: Alma Adams (D-N.C.), Greg Casar (D-Texas), Dwight Evans (D-Pa.), Sylvia Garcia (D-Texas), Raúl Grijalva (D-Ariz.), Pramila Jayapal (D-Wash.), Barbara Lee (D-Calif.), Summer Lee (D-Pa.), Betty McCollum (D-Minn.), Jim McGovern (D-Mass.), Seth Moulton (D-Mass.), Alexandria Ocasio-Cortez (D-N.Y.), Delia Ramirez (D-Ill.), Jamie Raskin (D-Md.), Bennie Thompson (D-Miss.), Rashida Tlaib (D-Mich.), Nikema Williams (D-Ga.), Frederica Wilson (D-Fla.).

“Navient's flawed cancellation process has caused confusion and complexity for borrowers who were first cheated by predatory, for-profit schools, and now find their private student loan balances at the mercy of Navient, a company known for its deceptive student loan practices and working hand-in-hand with these fraudulent institutions. The fox is guarding the henhouse, and we can't stand by and watch. Navient must fully recognize borrowers' rights and cancel private student loans where there is evidence of fraud and wrongdoing. We join Senator Warren and all signers in urging supervisory agencies to take immediate action to ensure consumers are protected." – Ashley Harrington, Senior Director of Policy and Advocacy, PPSL

Senator Warren has led the fight to reform our higher education system, cancel student loan debt, and hold student loan servicers accountable:

  • In November 2024, Senators Elizabeth Warren (D-Mass.), Richard Blumenthal (D-Conn.), Chris Van Hollen (D-Md.), and Tammy Duckworth (D-Ill.) sent a letter blasting MOHELA for abusing borrowers with potentially illegal, exploitative terms of use.
  • In October 2024, Senators Elizabeth Warren (D-Mass.) Dick Durbin (D-Ill.), Sheldon Whitehouse (D-R.I.), and Raphael Warnock (D-Ga.) sent a letter to the Department of Justice (DOJ) and Department of Education (ED) commending the agencies on their progress in helping borrowers who are struggling financially to discharge their student loans in bankruptcy and asking them to continue expanding awareness of the Biden-Harris administration’s new policy.
  • In October 2024, Senator Elizabeth Warren (D-Mass.) celebrated new federal student debt relief, bringing the total number of Americans who have had their debt canceled under the Public Service Loan Forgiveness (PSLF) program during the Biden-Harris Administration to a historic 1 million people and counting.
  • In September 2024, Senators Warren (D-Mass.) and Merkley (D-Ore.) released a new report examining the impact of the Biden-Harris administration’s new Higher Education Act rule, finding that low- and middle-income borrowers, seniors, women, and Black borrowers will receive enormous benefits from the new rule.
  • In August 2024, Senator Warren joined Senators Jeff Merkley, Ron Wyden (D-Ore.), and Richard Blumenthal (D-Conn.) to launch an investigation into the reported mishandling of student loan transfers by MOHELA, Nelnet and credit reporting agencies.
  • In August 2024, Senator Warren (D-Mass.) and Representative Madeleine Dean (D-Pa.) led over 30 lawmakers in a letter urging student loan servicer Navient to reform its flawed process to cancel the private student loans of borrowers who attended fraudulent, for-profit colleges.
  • In July 2024, Senators Warren, Ron Wyden, Chris Van Hollen, and Bernie Sanders, sent a letter to Secretary of Education Miguel Cardona, cautioning the Department of Education on Federal Student Aid’s transition to the Unified Servicing and Data Solution system.
  • In July 2024, Senators Warren, Schumer, and Sanders released a joint statement on the American Federation of Teachers’ lawsuit against MOHELA for allegedly overcharging and misleading student loan borrowers.
  • In May 2024, Senators Warren and King led their colleagues in a letter to Education Secretary Miguel Cardona, urging them to provide guidance and communication to borrowers as the Public Service Loan Forgiveness program transfers from MOHELA to the Department of Education. 
  • In May 2024, Senator Warren led a growing coalition of senators in urging the Department of Education to hold student loan servicer MOHELA accountable for its failures.
  • In May 2024, Senator Warren and 24 members of the U.S. Senate sent a letter to Senator Tammy Baldwin, Chair of the Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies, and Senator Shelley Moore Capito, Ranking Member of the Subcommittee, encouraging them to provide $2.7 billion in funding to the Office of Federal Student Aid (FSA) in fiscal year (FY) 2025.
  • In May 2024, Senators Warren, Carper, Kaine, and Representative Don Davis (D-N.C.) called on the Department of Defense (DoD) to release data on the Postsecondary Education Complaint System (PECS), a centralized database to track complaints against schools who participate in the Tuition Assistance (TA) and My Career Advancement Account Scholarship (MyCAA) program.
  • In April 2024, Senator Warren led eight of her colleagues in sending a letter to David L. Yowan, President and Chief Executive Officer of student loan servicer Navient, urging the servicer to cancel decades-old private student loans pushed onto borrowers attending fraudulent, for-profit colleges.
  • In April 2024, Senators Warren, Blumenthal, Markey, and Van Hollen released a new report: Servicing Scandals: Student Loan Servicers’ Failures During Return to Repayment, which reveals a decades-long pattern of student loan servicer incompetence and misconduct that has affected millions of borrowers nationwide.
  • In April 2024, Senator Elizabeth Warren led a hearing on student loan servicer Higher Education Loan Authority of the State of Missouri (MOHELA) and its failures during borrowers’ return to repayment, including MOHELA’s mismanagement of the Public Service Loan Forgiveness program. 
  • In March 2024, Senators Elizabeth Warren and Ron Wyden (D-Ore.), Chair of the Senate Finance Committee, along with U.S. Representatives Ayanna Pressley (D-Mass.), Pramila Jayapal (D-Wash.), Raúl Grijalva (D-Ariz.), and John Larson (D-Conn.), led their colleagues in calling on the Social Security Administration (SSA), the U.S. Department of the Treasury (Treasury), and the U.S. Department of Education to end the practice of offsetting Social Security benefits to pay off defaulted student loans. 
  • In February 2024, Senator Warren, Majority Leader Chuck Schumer (D-N.Y.), and Senator Bernie Sanders (I-Vt.) released a statement calling for an investigation into student loan mismanagement by MOHELA.
  • In January 2024, Senators Warren, Schumer, Sanders, Senator Raphael Warnock (D-Ga.), and Senator Alex Padilla (D-Calif.), along with Representative Ayanna Pressley, Assistant Democratic Leader Jim Clyburn (D-S.C.), Representative Frederica Wilson (D-Fla.), and Representative Ilhan Omar (D-Minn.), led their colleagues in calling on the Secretary of Education Miguel Cardona to host a fourth session of the student debt negotiated rulemaking to consider relief for borrowers experiencing financial hardship.
  • In December 2023, U.S. Senators Warren, Richard Blumenthal, Ed Markey,, and Chris Van Hollen (D-Md.) sent follow-up letters to student loan servicers – MOHELA, EdFinancial, Nelnet, and Maximus – raising concerns about borrowers’ problems with return to repayment, requesting information about the borrower experience, and pushing back on the servicers’ claim that budget shortfalls limit their ability provide quality customer service to millions of borrowers.
  • In December 2023, Senators Warren, Schumer, Sanders, Alex Padilla (D-CA), and Representatives Ayanna Pressley (D-Mass.), Ilhan Omar (D-Minn.), and Frederica Wilson (D-Fla.) sent a letter to the U.S. Secretary of Education Miguel Cardona, urging him to leverage his existing and full authority under the Higher Education Act to provide expanded student debt relief to working and middle-class borrowers.
  • In August 2023, Senator Warren, Congresswoman Ayanna Pressley, Senate Majority Leader Chuck Schumer (D-N.Y.), Senators Alex Padilla and Raphael Warnock (D-Ga.) and U.S. Representatives Ilhan Omar, Jim Clyburn, and Frederica Wilson led 79 other lawmakers in a letter to President Joe Biden, urging him to swiftly deliver on his promise to deliver student debt cancellation to working and middle class families by early 2024.
  • In October 2022, Senator Warren and Representative Ayanna Pressley (D-Mass.) visited communities across Massachusetts to celebrate the Biden administration’s student debt cancellation plan and help residents sign up for student loan relief. 
  • In March 2022, Senator Warren, along with Senate Democratic Whip Dick Durbin (D-Ill.), Senator Brown and Representatives Pramila Jayapal (D-Wash.) and Mark Takano (D-Calif.), urged Secretary of Education Miguel Cardona to swiftly discharge the loans of borrowers defrauded by predatory for-profit colleges and universities, including those operated by Corinthian College. 
  • In January 2022, Senator Warren, along with Senate Majority Leader Charles E. Schumer (D-N.Y.) and Representatives Jayapal, Pressley, Ilhan Omar (D-Minn.), and Katie Porter (D-Calif.) led more than 80 colleagues in a bicameral letter to the Department of Education calling for it to release the memo outlining the Biden administration’s legal authority to cancel federal student loan debt and immediately cancel up to $50,000 of debt for Federal student loan borrowers.
  • In April 2021, Senators Warren and Raphael Warnock (D-Ga.) led a group of colleagues in a letter to Education Secretary Miguel Cardona urging the Department of Education to take swift action to automatically remove all federally-held student loan borrowers from default.

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