Warren Releases New Evidence of Navient Student Loan Malfeasance
Calls on Navient CEO to Explain Findings of Previously Undisclosed Audit
Seeks Explanation for Misinformation Provided to Senate and the Public
Text of the Letter (PDF) | Text of the Report (PDF)
Boston, MA - United States Senator Elizabeth Warren (D-Mass.) sent a letter to Jack Remondi, the President and CEO of Navient Corporation, the nation’s largest servicer of federal and private student loans, regarding a previously undisclosed Education Department audit report that reveals Navient’s disturbing record of cheating student borrowers and driving them into debt. The Consumer Financial Protection Bureau (CFPB) and several state Attorneys General have sued Navient, and numerous consumer advocates have raised concerns about its appalling practices. The previously undisclosed audit report bolsters the allegations against Navient, and it directly contradicts Mr. Remondi's explicit denial to Senator Warren that such an audit existed.
“Navient told the public that there was no merit to the CFPB’s lawsuit even after it received an Education Department audit that bolstered the allegations and found the company was not adequately servicing student borrowers. Navient needs to explain the appalling findings of this audit and why the company denied that it existed.” said Senator Warren.
According to the audit, Navient offered only forbearance as an option for about 10 percent of student borrowers the company spoke to on the phone, leaving them with incomplete information and unfairly steering them into forbearance. The audit report also states that, “in some instances, interest was capitalized when another option may have prevented it,” meaning that many struggling student borrowers who sought help from Navient ended up owing more money than if they had never spoken to the company. These findings appear to validate the allegations that Navient boosted its profits by steering student borrowers into forbearance when that was often the worst financial option for them.
In a lawsuit filed in January 2017, the CFPB alleged that Navient (formerly Sallie Mae) unfairly steered struggling student borrowers into forbearance plans that caused them to pay more than they had to on their student loans. According to the CFPB, from January 2010 to March 2015, Navient added up to $4 billion in interest charges to the principal balances of borrowers who were enrolled in multiple, consecutive forbearances. This audit report raises questions about whether a significant portion of these charges could have been avoided had Navient acted in the best interests of these borrowers. It also gives disturbing new weight to Navient’s astounding assertion in response to the CFPB’s lawsuit that, “There is no expectation that the servicers will act in the interest of the consumer.”
Senator Warren called on Remondi to retract the falsehoods exposed by this audit, explain why he denied to her that such an audit existed, and explain his company’s longstanding record of unfair and deceptive practices.
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