Navient has fired back on allegtions made in lawsuits filed this week and took a swipe at Obama administration in its waning days.
Two attorneys general and the federal Consumer Financial Protection Bureau filed suit against, the Wilmington-based company that services student loans.
Navient, which services student loans, was spun off from Sallie Mae, which is based near Newark.
“For years, Navient failed consumers who counted on the company to help give them a fair chance to pay back their student loans,” said Consumer Financial Protection Bureau Director Richard Cordray. “At every stage of repayment, Navient chose to shortcut and deceive consumers to save on operating costs. Too many borrowers paid more for their loans because Navient illegally cheated them and today’s action seeks to hold them accountable.”
Suits filed in Illinois and Washington state made similar claims.
Republicans in Congress are said to be targeting the Financial Protection Bureau, claiming it has exceeded its authority.
Shares of both Sallie Mae and Navient have been rising on speculation that the new administration will expand the student loan market and not put their operations under the microscope.
“The allegations of the Consumer Financial Protection Bureau, Illinois Attorney General and Washington Attorney General are unfounded, and the timing of these lawsuits—midnight action filed on the eve of a new administration—reflects their political motivations,” the statement alleged.
The statement continued, “Navient welcomes clear and well-designed guidelines that all parties can follow, and we had hoped our extensive engagement with the regulators would achieve this objective. Instead, the suits improperly seek to impose penalties on Navient based on new servicing standards applied retroactively and applied only against one servicer. The regulator-asserted standards are inconsistent with Department of Education regulations, and will harm student loan borrowers, including through higher defaults.”
Navient cited the following accomplishments:
- 49 percent of loan balances serviced by Navient for the federal government are enrolled in income-driven repayment plans. Assertions that we do not educate borrowers about IDR plans ignore the facts.
- Navient is a leader in advancing policy recommendations to streamline enrollment and reenrollment in income-driven plans—reforms which we believe would make a meaningful difference for millions of Americans with student loans.
- Federal borrowers serviced by Navient are 31 percent less likely to default than their peers at other servicers. Private loan delinquencies and defaults are at among historic lows.
- In 2009, Navient pioneered the first private education loan modification program. The program was designed to help customers stay current on their loans and, unlike federal program solutions, make progress on repaying their principal balance. Today, more than $2 billion in loan balances are enrolled in these programs.
The statement concluded, “Navient has a responsibility to its customers, shareholders, and employees to defend itself—publicly and in court—against this unsubstantiated, unjustified and politically driven action. We cannot and will not accept agenda-driven ultimatums designed to get headlines rather than help for student borrowers. We will vigorously defend against these false allegations and continue to help our customers achieve financial success.”
Meanwhile, SLM Corp., also known Sallie Mae, distanced itself from the allegations and issued the following statement;
“Neither SLM Corporation, Sallie Mae Bank, nor any of their current subsidiaries are named in, or otherwise a party to, the lawsuit and are not alleged to have engaged in any wrongdoing,”
In the case of a lawsuit filed by the Illinois Attorney General, Sallie Mae was reportedly mentioned.
“As SLM Corporation has consistently disclosed in its periodic reports, Navient has accepted responsibility for all costs, expenses, losses and remediation arising from this matter,” the Sallie Mae release stated.
