Wilmington-based student loan servicer Navient came out swinging in responding to a lawsuit by the Pennsylvania Attorney General over its business practices.
Navient shares were down 13 percent in Thursday trading.
The company issued the following statement on the suit that made national headlines.
“The allegations are completely unfounded and the case was filed without any review ofPennsylvaniaresidents’ customer accounts. We comply with the rules that govern the student loan program as set byCongressand theU.S. Department of Education, and there are no allegations that we have violated these rules,” Navient stated.
The statement continued, “Navientis a leader in helping student loan borrowers succeed; in fact,49 percent of balances serviced byNavientfor the government are enrolled in income-driven repayment plans andNavient-serviced borrowers are37 percent less likelyto default than those serviced by others. 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.”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.
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.
“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,” Shapiro said. “The more businesses like Navient put their bottom line ahead of the interests of their customers and consumers, the more vigilant we will be to protect Pennsylvanians and hold businesses like Navient accountable for their misconduct.”
The lawsuit was filed in the U.S. District Court for the Middle District of Pennsylvania.
As of September 2017, Pennsylvania residents had filed 1,059 complaints against Navient with the Consumer Financial Protection Bureau, the release from the AG’s office stated.
Pennsylvanians collectively owed $61.8 billion in private and federal student loans as of December 2016. The average student loan debt for Pennsylvania college graduates in 2016 was $35,759 – the second highest of any state in the nation.
Navient, which was spun off by Newark-based Sallie Mae a few years ago, has been under fire on the state and federal level for its collection practices. The company has countered such claims by noting that its customers have lower-than-average default rates, a sign that it works with customers.
The suit is a bit unusual since Navient operates a large loan servicing center in Wilkes Barre, PA. Attorneys general have been known to shy away from suing large employers in their home state.
Navient has been working to diversify beyond student loans by buying companies in the collections and servicing area. One recent example is Duncan, a company provides services to city parking meter systems.