Pennsylvania Attorney General Josh Shapiro sues student loan company


HARRISBURG, Pa. — Pennsylvania’s attorney general has accused the nation’s largest student loans company of engaging in abusive practices in a lawsuit filed Thursday that alleged it improperly added billions of dollars in costs to the borrowers.

The lawsuit filed in federal court in Harrisburg, Pa., said Navient Corp. and its subsidiary Navient Solutions LLC sold “risky and expensive” subprime loans and harmed borrowers and co-signers by failing to perform basic loan management tasks.

“Evidence will likely show that (1) there was a profound impact on the financial lives of borrowers to whom defendants sold risky subprime loans, (2) many borrowers had to delay starting a family, ( 3) many borrowers were unable to save for the down payment on a home, and (4) others were unable to start their own businesses,” the lawsuit alleged.

He claims the companies funneled people into a program that added massive interest charges when they should have funneled them into income-geared repayment plans.

A statement from Navient called the allegations completely unfounded and said they complied with federal student loan rules.

The lawsuit accuses Navient of violating federal and state consumer protection laws and seeks a court order directing them to change their practices, release borrowers, and refund any profits they made from the alleged practices.

Pennsylvania Attorney General Josh Shapiro, a Democrat, in a statement accused Navient of putting its interests ahead of those of the families who took out the loans. He said the case could affect hundreds of thousands of state residents.

“They crossed the line in pursuit of profit and we are here to change their behavior and help people who have been wronged,” Shapiro said.

Shapiro’s agency said that since last month, more than 1,000 Pennsylvanians have filed complaints against Navient with the Consumer Financial Protection Bureau.

The lawsuit claims that Navient gives loans to schools with low graduation rates, knowing that many will not be able to repay them, and pushes borrowers into short-term “loan forbearances” that increase costs rather than reduce them. help enroll in repayment plans linked to income levels and family size.

Navient customer service representatives, according to the lawsuit, receive average call duration financial incentives that encourage them to enroll people in forbearance rather than income-driven reimbursement plans.

Navient has a student loan servicing center in Wilkes-Barre with approximately 1,000 employees.

Earlier this year, the Consumer Financial Protection Bureau, Illinois and Washington State also continued lending practices. Navient denied the allegations and said the lawsuits would drive up loan costs.


Previous Chelsea keen to send Charly Musonda Jr. on loan to England
Next Can I get a loan for a mobile home?