May 11, 2020

Navient Settles Student Loan Lawsuit

Navient Settles Student Loan Lawsuit


Navient, one of the nation’s largest student loan servicers, has settled a student loan forgiveness lawsuit.

Here’s what you need to know – and what it means for your student loans.

Navient Student Loans

If you have a student loan, there’s a good chance that Navient is your student loan servicer. Navient, which spun off from Sallie Mae, has more than 10 million student loan customers and services more than $300 billion of government and private student loans. The lawsuit, which was filed in federal court in New York in October 2018 by members of the American Federation of Teachers, the second largest teachers union in the U.S., alleged that Navient systematically misdirected borrowers into student loan repayment and forbearance programs when they really should have been directed into the Public Service Loan Forgiveness program. As a result, the plaintiffs claim they missed out on payments that could have qualified them for public service loan forgiveness, which enables public servants to have their federal student loans forgiven after meeting certain requirements.

The teachers alleged that Navient ignored borrowers’ best interests and prevented borrowers from moving to FedLoan (the student loan servicer that administers the Public Service Loan Forgiveness program), so that Navient could continue to service their student loans and earn fees. As a result, the plaintiffs claim that they and others like them who wanted to pursue public service loan forgiveness are collectively paying millions of dollars more than they otherwise should in student loan payments.


The Proposed Settlement

Judge Denise Cote dismissed most of the plaintiffs’ claims because they were either vague, lacked documented proof, or didn’t rise to a violation of law. Navient, which has denied any wrongdoing, and the American Federation of Teachers reached a settlement that includes the following:

  • Navient will pay $1.75 million to fund an independent organization that will educate borrowers who work in public service about the Public Service Loan Forgiveness program.
  • Each of the 10 plaintiffs will receive $15,000.
  • Navient will further train its customer service representatives to listen for key words related to public service loan forgiveness so they can connect borrowers with the Public Service Loan Forgiveness program.
  • Navient will also monitor customer service calls to ensure its representatives are providing accurate information to borrowers who are interested in public service loan forgiveness.
  • Navient will create standardized templates for borrowers who request information about public service loan forgiveness.

Neither Navient nor the American Federation of Teachers have commented publicly on the settlement. The Public Service Loan Forgiveness Program is a federal program that forgives federal student loans for borrowers, including teachers, who are employed full-time (more than 30 hours per week) in an eligible federal, state or local public service job or 501(c)(3) non-profit job who make 120 eligible on-time payments.


What The Navient Lawsuit Means For Your Student Loans

Have you had a difficult experience with your student loan servicer? Whether you are seeking student loan forgiveness or simply paying off student loans, make sure you know your rights. Not knowing them potentially can cost your hundreds, if not thousands, of dollars, due to mistakes or incorrect information. Make sure you understand the following:

1. Understand all your options

When it comes to student loan repayment, you have several options. Don’t expect your student loan servicer – the company where you send your monthly student loan payments – to tell you which option is best for you. These four options are a good place to start:

Student loan refinancing

Student loan consolidation

Income-driven repayment plans

Student loan forgiveness


2. Your student loan servicer may not have all the answers

Your student loan servicer is not your financial adviser. That may sound counter-intuitive, but that’s why you need to do your own independent research. Not every customer service representative will understand your specific questions, needs or goals.


3. Confirm in writing

Correspond in writing with your student loan servicer. If something goes wrong six months later, it’s better to have a written record of your communication.


4. File a complaint, if necessary

If you have a legitimate issue with your student loan servicer, you can file a complaint with the U.S. Department of EducationConsumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), your state attorney general, lender or student loan servicer.


5. Double check everything

Student loan repayment is all about paying attention to details. If you and your student loan servicer agree to apply a payment a certain way, double check your statement to ensure your payment has been applied correctly. You don’t want to find out three years later that your student loan payment was never applied. Your student loans may be your largest liability. Treat your student loans with the time and attention they deserve.


Resources: Student Loans

Should you pay off student loans during COVID-19?

How COVID-19 affects student loan forgiveness

Here’s everything that’s happened to your student loans in 2 weeks

15 most popular questions about student loans and Coronavirus

How to pay your student loans during Coronavirus

Student loan forgiveness benefits these members of Congress

How to get financial relief for your student loans during Coronavirus

5 ways to lower your student loan payments during Coronavirus

Student loan refinancing rates are incredibly cheap



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