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The California Attorney General announced Thursday that he was suing the country's largest student loan processor, alleging that it is hurting consumers by failing to properly discharge debts.
Attorney General Xavier Becerra said that the state would attack Navient Corp. He said the company routinely and illegally served federal student loans by guiding borrowers to more expensive repayment plans, without telling them how to switch to income-based repayment plans. "Nobody should see his broken American dream because a loan services company is cheating these future leaders on the possibility of going forward," said Becerra, a Democrat candidate in the US election. November
Navient President and CEO Jack Remondi said the allegations were unfounded and that the law "Another attempt to blame a single provider for the failures of the higher education system and the federal student loan program to achieve the desired results. "
" The need to blame someone has led these lawsuits, "said Remondi in a statement. The low default rates of the company and the high rate of enrollment in other repayment programs
About 4.6 million Americans were in default of paying their student loans in December , according to the Ministry of Education. This is more than double what it was four years ago and more than 10% of the 42.8 million Americans who currently have a student loan supported by the ministry.
Of the approximately 12 million borrowers served by Navient, Becerra
Becerra stated that Navient also awarded thousands of overdue loans to its subsidiaries, Pioneer and General Revenue Corp., and alleged that these subsidiaries misled borrowers as to their options
.
Navient, a publicly traded company, was once part of Sallie Mae, which was originally a government entity responsible for federal loans for education. Navient became a separate corporation in 2014.
The US Bureau of Consumer Financial Protection and Attorneys General of Illinois and Washington filed suit against Navient early last year, alleging similar violations. The Pennsylvania Attorney General sued the company in October for its subprime mortgages more risky
Last month, the Trump administration announced that it was closing the office student loans office consumers, potentially limiting its investigation of the abuse of the student loan market.
The federal office also investigated and sued the for-profit education company Corinthian Colleges.
On Wednesday, a federal magistrate in San Francisco dismissed a separate complaint from Becerra alleging that the Trump administration had illegally waived an Obama promise. quickly forgive the loans of Corinthian students. The magistrate gave the state 30 days to show that he had the right to sue the US Department of Education.
Copyright Associated Press
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