Last week, Navient Corp., the nation’s largest student loan servicer, moved for summary judgment on two enforcement claims brought against it by the Consumer Financial Protection Bureau alleging that Navient engaged in abusive and unfair practices under the Consumer Financial Protection Act.
In January 2017, the CFPB filed an enforcement action in the U.S. District Court for the Middle District of Pennsylvania, alleging Navient engaged in harmful federal student loan servicing practices. Specifically, the CFPB claimed that Navient injured “hundreds of thousands” of federal student loan borrowers by failing to inform them about repayment options based on income and instead pushed students to enroll in forbearance plans. Income–driven plans are typically more beneficial to students because they can lower their monthly payment amounts while bringing their accounts current. Forbearance plans, while cheaper and faster for Navient and its employees, cause interest to add up and increases the amount students ultimately repay.
In its motion for summary judgment, Navient asserts that the CFPB failed to raise “any real doubt” around whether borrowers were told about income-driven plans, and also failed to identify a single borrower supporting these allegations. Of the fifteen borrowers identified by the CFPB, fourteen were deposed and all of them apparently were informed about the income-driven plans, including prior to and immediately after obtaining forbearance. Navient claims this shows that none of the borrowers were “steered” into forbearance plans, and therefore there is no factual support for the allegations that Navient exploited borrowers for its own profit. Navient argues that “simply put, Navient did not cause substantial injury to, or take advantage of, borrowers, as required to establish an unfair or abusive practice.”
The CFPB will file a response to Navient’s motion for summary judgment and a decision from the Court will then issue.