Pennsylvania Attorney General Files Suit Against Navient; Company Responds to Allegations

10/10/2017 3:17 PM

The attorney general seeks civil penalties and restitution for borrowers.


Pennsylvania Attorney General Josh Shapiro, with prior notice to the Consumer Financial Protection Bureau, has filed a lawsuit against Navient Corp. and its subsidiary Navient Solutions LLC for alleged violations of federal and state consumer protection laws when originating and servicing student loans.

According to the 64-page complaint filed in U.S. District Court for the Middle District of Pennsylvania  Oct. 5, Navient’s conduct related to its origination of subprime student loans and its servicing and collection on borrowers’ student loans allegedly violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law and federal Consumer Financial Protection Act of 2010.

The attorney general seeks relief for student loan borrowers, including anyone who received private student loans from Sallie Mae, a predecessor of Navient; as well as borrowers experiencing issues with repayment who had their federal or private student loans serviced by Navient, according to news release.

Navient issued a news release in response to the lawsuit, stating, “the allegations are completely unfounded and the case was filed without any review of Pennsylvania residents’ customer accounts. We comply with the rules that govern the student loan program as set by Congress and the U.S. Department of Education, and there are no allegations that we have violated these rules … We will vigorously defend our record in court, and are confident we will prevail following an impartial review of the facts. In the meantime, we will continue to provide industry-leading service to our customers.”

The Office of the Attorney General, according to its news release, is asking for full restitution to borrowers affected by the alleged unlawful practices; disgorgement by Navient of “unlawfully gained profits”; civil penalties to be determined; recession or reformation of all contracts or loan agreements between Navient and Pennsylvania consumers affect by the alleged violations; and for Navient to cease collecting on loans at issue in the lawsuit—and delete any negative credit information furnished to consumer reporting agencies.

ACA International will continue to follow this story.

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