Economy

Navient Hit With Suit Over 'Deceptive' Student Loan Practices

Navient Hit With Suit Over 'Deceptive' Student Loan Practices”

Pennsylvania's state attorney general's office has sued Navient, accusing the biggest USA student loan company of deceptive practices and predatory conduct.

The lawsuit, he said, also had affected Pennsylvanians who got a private student loan from Sallie Mae ( SLM ), of which Navient was once a part.

Sallie Mae shares fell 3%.

"Navient's deceptive practices and predatory conduct harmed student borrowers and put their own profits ahead of the interests of millions of families across our country who are struggling to repay student loans", says Attorney General Josh Shapiro.

Washington and IL have also sued the company, which has yet to issue a response to the latest allegations.

Earlier this year, the Consumer Financial Protection Bureau, Illinois and Washington state also sued over the loan practices. 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.

In a statement, Navient called the lawsuit "completely unfounded" and said "the case was filed without any review of Pennsylvania residents' customer accounts". Shapiro says the two made "risky and expensive" private student loans that carried interest rates as high as almost 16 percent and fees equal to 9 percent of the loan. The company is one of the largest student loan providers in the USA, valued at more than $3.5 billion, according to FactSet.

The suit says Navient loaned to students attending schools with low graduation rates and "an extremely high percentage" of the students couldn't repay the loans. Some borrowers, as a result, have had to delay starting a family, purchasing a home or opening a business, the suit alleged. In the meantime, we will continue to provide industry-leading service to our customers."Attorney General Josh Shapiro filed a lawsuit against the nation's largest servicer of federal and private student loans and its subsidiary Navient Solutions, LLC, over what were described as widespread abuses in their student loan origination and servicing businesses".

"The company should have been helping borrowers apply for income-driven repayment plans during this time", Shapiro's office said. From 2010 to 2015, the company added up to $4 billion in interest charges to the principal balances of borrowers, Shapiro said.



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