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How the Navient lawsuit affects your student loans

This servicer is accused of tricking borrowers into high-cost repayment plans.

Updated

Federal and private student loan servicer Navient, formerly part of Sallie Mae, is facing a class-action lawsuit for alleged deceptive practices that violated multiple state and federal laws. Since it’ll probably take years to be resolved, you likely won’t see any changes to your student loans anytime soon. But that doesn’t mean there aren’t ways to protect yourself from Navient — and other less-than-reputable servicers.

What are the details behind the Navient lawsuit?

The Consumer Financial Protection Bureau (CFPB) and five states have filed a class-action lawsuit against Navient. They allege the student loan servicer unfairly and illegally pushed borrowers into more expensive repayment plans, ignored complaints and incorrectly processed payments.

The first lawsuit was filed back in January 2017 by the CFPB. And in the months since, the attorneys general of California, Illinois, Mississippi, Pennsylvania and Washington have also presented evidence against Navient.

At the time of the initial lawsuit, CFPB Director Richard Cordray said that “Navient failed consumers who counted on the company to help give them a fair chance to pay back their student loans.”

According to the CFPB, Navient:

  • Failed to apply or allocate payments according to borrower instructions.
  • Pushed borrowers into forbearance instead of other, less costly, repayment plans.
  • Hid important information on how borrowers could maintain lower payments.
  • Misinformed private student loan borrowers on requirements for cosigner release.
  • Misreported payments made by borrowers with a disability, harming their credit.

As for the state accusations, most come down to the subprime rates Sallie Mae offered for its private student loans — back when Navient was connected with the lender — as well as its overall deceptive practices that broke state laws.

Navient denies these allegations. It claims the real issue is with the student loan system in general, and that it shouldn’t be held responsible for the complexity that makes repaying student loans difficult for many borrowers. It also states that servicers are immune to state laws — meaning it isn’t subject to consumer protection regulations made by state legislatures.

How does the Navient lawsuit affect my student loans?

For now, you might not notice any major changes. The lawsuit against Navient is expected to go on for years as multiple courts handle the back-and-forth arguments presented by the CFPB, state attorneys general and Navient.

However, if Navient is found guilty of deceiving borrowers, incorrectly processing payments and overall negatively impacting borrower experiences, you may receive compensation. This is all dependent on the next few years, so don’t expect a check in the mail anytime soon.

As for dealing with Navient itself, check out our guide to Navient student loan servicing to learn how it works and common problems to avoid.

How do I know if Navient is my student loan servicer?

Your student loan servicer is the company you make repayments to each month. There are several servicers — including Navient — that work with federal student loan borrowers. You can check who yours is by logging in to the Federal Student Aid website and selecting your loan account.

For private student loans, check your monthly statement or log in to your online account. The company sending you statements is your servicer.

Can I switch my federal student loan servicer?

Yes. You have two options if you want to change your federal student loan servicer:

  • Take out a federal Direct Consolidation Loan. If you have several federal student loans and want to keep the benefits that come with them, this is likely your best bet. You can choose your new servicer and make just one monthly repayment for all of your federal student debt.
  • Refinance your loans with a private lender. Not planning on taking advantage of federal loan perks? Have good credit? Consider refinancing your federal and private student loans with a new lender. This not only lets you switch up your servicer, but you could also qualify for a lower interest rate or better terms.

Compare student loan refinancing options

Data indicated here is updated regularly
Name Product Min. Credit Score Max. Loan Amount APR
Discover Private Consolidation Loan
Good to excellent credit
$150,000
2.80% to 12.49%
Splash Financial Student Loan Refinancing
660
None
Starting at 1.89%
Save on your student loans with this market-leading newcomer.
Credible Student Loan Refinancing
Good to excellent credit
None
1.99% to 9.24%
Get prequalified offers from top student loan refinancing providers in one place.
Education Loan Finance Student Loan Refinancing
680
None
2.39% to 6.01%
Lower your student debt costs with manageable payments, affordable rates and flexible terms.
Earnest Student Loan Refinancing
650
$500,000
1.99% to 5.64%
Get a tailored interest rate and repayment plan with no hidden fees.
SoFi Student Loan Refinancing Variable Rate (with Autopay)
650
Full balance of your qualified education loans
2.25% to 6.09%
A leader in student loan refinancing, SoFi can help you refinance your loans and pay them off sooner.
Purefy Student Loan Refinancing (Variable Rate)
620
$300,000
2.27% to 7.49%
Refinance all types of student loans — including federal and parent PLUS loans.
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Compare up to 4 providers

5 tips to stay on top of your student loan servicer

Although scrutiny has been on Navient recently, you’ll still want to remain an informed borrower — no matter your servicer. Here are five tips to stay on top of your loans and ensure your servicer is treating you fairly:

  1. Know your repayment options. There are several repayment plans available to federal student loan holders. Have private loans? You may also be eligible for graduated repayments, forbearance and other plans — depending on your lender.
  2. Keep detailed records. Record all of your repayments and correspondence with your servicer. If possible, keep communication written — either via email or letters — so that you have documented proof of what you’ve been told.
  3. Stay up to date on legal changes. As regulations evolve and lawmakers adjust the student loan process, there may be changes to federal repayment plans and loan forgiveness. Keep a close eye on these to ensure a program you were hoping to sign up for hasn’t changed its eligibility requirements — or been canceled altogether.
  4. Check your credit report regularly. Because the CFPB alleges Navient misreported some borrowers accounts in default, it’s vital that you check your credit report regularly for potential errors.
  5. File a complaint, if necessary. While Navient’s been accused of ignoring borrower complaints, that doesn’t mean you shouldn’t submit one — it’s a good way to document any wrongdoings made by your servicer. You can send a formal complaint to the US Department of Education and the CFPB, as well as your servicer directly.

Bottom line

The Navient class-action lawsuit might not have much of an impact on your student loans right now, but you could qualify for compensation later on down the road if it’s found guilty of deceptive practices. In the meantime, keep a close eye on your student loan account and credit report — no matter your servicer — to ensure you’re not being taken advantage of.

Want to learn more about how it all works? Check out our guide to student loan servicers.

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