This Navient lawsuit update focuses on the settlement agreement that the CFPB has reached with the company. What will the settlement mean for borrowers? And how did this affect the company’s practices? Read on to learn more. Originally published in July 2013, this article has been updated to reflect the latest developments in the case. In the meantime, you can also learn more about the settlement itself. Here are some things you need to know:
CFPB lawsuit against Navient
The CFPB is now in litigation with Navient, after six years of investigation. Its lawsuit has already lasted more than three years, with little evidence to support its claims. Now, the CFPB should abandon this case and focus its efforts on getting rid of #NeverNeededRules and delivering regulatory relief to struggling consumers. In other words, the CFPB needs to get rid of the Navient lawsuit as quickly as possible.
The CFPB lawsuit against Navient claims that Navient misled borrowers about their eligibility for a federal public service loan forgiveness program. It allegedly failed to transfer the loans to another lender, FedLoan, and put some borrowers in forbearance during hard times. Forbearance is a program that puts repayment on hold, but interest charges continue to accumulate. This lawsuit is meant to serve as a warning to other servicers.
CFPB settlement with Navient
The Consumer Financial Protection Bureau announced a $2 million settlement against Navient on October 29. The lawsuit alleges that Navient violated the Fair Credit Reporting Act and the Fair Debt Collection Practices Act by offering borrowers a high-interest private loan but preventing them from obtaining an income-driven repayment plan. In addition to seeking redress for borrowers who suffered financial harm as a result of Navient’s actions, the Consumer Financial Protection Bureau also wants to protect new borrowers from similar practices.
The CFPB settlement with Navient will make some important changes to the way that Navient conducts business. In addition to removing certain incentives for its customer service agents to terminate calls prematurely, the agreement requires Navient to improve its communication with borrowers. This includes requiring customer service representatives to provide clearer explanations of their income-driven repayment plans. And the company is required to train its customer service representatives on how to properly communicate with borrowers.
Impact of settlement on borrowers
Many borrowers have no idea of the consequences of loan settlements. Most people assume that it is just a one-time transaction that helps them pay off their debt faster. However, this is not the case. While the loan write-off is an opportunity for borrowers to pay less for the closure of their loan account, they are not aware of the intricacies of the calculation and the consequences of loan settlement. Taking the wrong step could haunt them for seven years or as long as credit rating agencies hold information about their financial history.
Debt settlement has long-term consequences. It can affect a consumer’s credit score, leading to lawsuits and garnishments. It also doesn’t always result in a satisfactory outcome. Although some creditors may agree to settle debts with consumers, only a minority of these individuals will get a favorable settlement. Those who don’t receive a favorable settlement may be required to pay their creditors in full after settling, incurring additional fees and increased tax liability.
Details of the settlement agreement
A new settlement agreement for the Navient lawsuit has been announced. The company has agreed to pay $260 to federal student loan borrowers, ending the linked legal actions between Navient and federal and state prosecutors. Although Navient denies the allegations, it has settled the case to avoid additional legal costs. The settlement will cover court costs for 39 states and disburse the remaining funds to former borrowers. The lawsuit against Navient was filed in June 2017 and was settled in March by former students and investors.
The deal includes several conduct reforms, including a requirement that Navient makes its income-driven repayment plans easier to understand and estimate. It also requires the company to train employees and provide counseling to those who serve as class representatives. The settlement also prohibits the company from paying customer service agents in a way that minimizes their counseling time. If you have been affected by Navient’s PSLF practices, the settlement may help you get out of debt faster.
Repercussions for borrowers
The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Navient for defrauded borrowers. The lawsuit alleges that Navient put struggling borrowers in high-cost repayment plans, including income-driven and abusive plans that imposed excessive interest rates. As a result, more than $4 billion in unnecessary interest was charged to borrowers. A settlement has been reached to resolve the lawsuit, and the repercussions for borrowers are looming.
The settlement will hold Navient accountable for misleading consumers, and it may serve as a blueprint for further reform of the student loan industry. The lawsuit traces its roots to 2009 when Navient improperly directed borrowers into forbearances, which prolong repayment and result in higher interest. The resulting forbearances will require borrowers to make lower payments while paying interest. The repercussions for borrowers will be severe, but not overwhelming.