Many people have student loans and rely on the servicers to process their payments and deal with them fairly when it comes to negotiating any repayment terms.  But the Consumer Financial Protection Bureau has shown us that we need to question everything when it comes to our student loans!  The CFPB recently sued Navient (formerly part of Sallie Mae), the largest servicer of both federal and private student loans for providing bad information, processing payments incorrectly, and failing to act when borrowers complained. The CFPB also alleged that Navient illegally cheated many struggling borrowers out of their rights to lower repayments, which caused them to pay much more than they had to for their loans.

Servicers are a critical link between borrowers and lenders. They manage accounts, process payments, and communicate directly with borrowers. When facing unemployment or other financial hardship, borrowers rely on their student loan servicer to help them enroll in alternative repayment plans or request a modification of loan terms. A servicer is often different from the lender, and borrowers typically have no control over which company is assigned to service their loans.

You have the right as a federal student loan borrower to make payments based on how much money you earn  — these repayment plans are called income-driven or income-based repayment plans. If you meet certain income and family-size criteria, these plans can offer monthly payments as low as zero dollars. Another important benefit of these plans is that for the first three years after enrollment, many consumers are entitled to have the federal government pay part of the interest charges if they can’t keep up AND All federal student loan borrowers enrolled in these plans may be eligible for loan forgiveness after 20 or 25 years of monthly payments.

The CFPB alleges that Navient provided bad information in writing and over the phone, processed payments incorrectly, and failed to act when borrowers complained about problems. This made it harder for borrowers to enter into an income-based repayment plan and to pay according to what they could afford. Moreover, the CFPB believes that Navient steered people away from the plans and encouraged them into forbearance instead.  Forbearance is when you take a short break from making payments, but interest continues to add up during forbearance.

If you enter into an income-based repayment plan, you usually need to recertify your income and family size annually.  Navient failed to inform borrowers of critical deadlines or the consequences of missing them  According to the CFPB, many borrowers did not renew their enrollment on time and lost affordable monthly payments.  Accrued interest was added to the borrower’s principal balance, and these borrowers may have lost other protections, including interest subsidies and progress toward loan forgiveness.

If you are having trouble paying your student loans, you should contact a lawyer who can help you in this area.  It is worth paying the lawyer’s fees to make sure you understand all your loans, how they work, and if there are any plans you can enroll in that will help you pay them off faster.  Struggling with student loans often pushes people into bankruptcy and you should get ahead of the problems if you can.  If you would like to see the full complaint, it is available on the CFPB’s website at http://files.consumerfinance.gov/f/documents/201701_cfpb_Navient-Pioneer-Credit-Recovery-complaint.pdf

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