Navient CEO Jack Remondi came out swinging in denouncing a lawsuit announced by California Attorney General Xavier Becerra.
The allegations are unfounded, and the lawsuit is another attempt to blame a single servicer for the failures of the higher education system and the federal student loan program to deliver desired outcomes, Remondi claimed.
“The need to blame someone has driven these lawsuits. Ironically, to date, this focus has been on the one servicer, Navient, that leads the industry with the lowest default rates and the highest enrollment in alternative repayment programs,” the Navient CEO stated.
He said those filing suits would be better served by:
• Improving financial literacy of students and families and provide better information about the full cost of earning their degree and the cost of any debt incurred to finance that degree—before they enroll in college
• Working to increase graduation rates—dropping out of school is the single largest factor in student loan defaults, and
• Simplifying the repayment programs and ease the enrollment process for these programs.
“These steps are not easy and require hard work. It is, unfortunately, much easier to file a lawsuit, creating the perception that something is being done,” Remondi stated.
The company will vigorously defend its actions, a release stated.
“Navient exploited every family’s dream of witnessing our children graduate from college. Our families are now facing a student loan debt crisis. America’s college students owe $1.5 trillion in outstanding student loans — more than the entire amount Americans owe in credit card debt. It’s $123 billion in federal student loan debt in California alone,” Becerra stated.
Navient, which was spun off from Newark-based Sallie Mae, has been dogged by allegations over its loan collection practices.
Shares closed at $13.05, down slightly for the day and well off the 2014 high of $22.