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WASHINGTON U.S. regulators sued Navient Corp on Wednesday, accusing the largest U.S. student loan
servicer of “systematically and illegally failing borrowers at
every stage of repayment.”
The Consumer Financial Protection Bureau said Navient, which
was formerly part of Sallie Mae, provided its student
borrowers with bad information, processed payments incorrectly
and failed to fix the problems after people complained.
A Navient representative did not immediately respond to a
request for comment.
Shares of Navient, which services 12 million borrowers, fell
sharply in a volume spike when news of the announcement was
reported, but they recovered quickly to trade up 0.8 percent at
$15.90 in the early afternoon.
Some of the allegations at the heart of the bureau’s
complaint involved income-repayment programs, which help
struggling borrowers to afford their loan payments.
Qualifying borrowers in some cases are entitled, for
instance, to have the federal government pay part of their
interest. Some can have their debt forgiven after 20 or 25 years
of monthly payments.
The bureau said Navient often failed to allocate payments to
borrowers’ accounts, steered people who had trouble paying into
forbearance and also obscured information that would have helped
them maintain lower monthly payments.
The complaint also named two of the company’s subsidiaries,
Navient Solutions and Pioneer Credit Recovery, and the regulator
said it planned to recover “significant relief” for wronged
student loan borrowers.
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