Student loan giant Navient Corp. has suffered a pair of courtroom defeats in its attempt to block government lawsuits alleging the nation’s largest student debt company mistreated borrowers, Bloomberg News reported today. The losses come in a trio of lawsuits filed in January by the U.S. Consumer Financial Protection Bureau and state attorneys general of Washington and Illinois. They collectively allege Navient mistreated hundreds of thousands of student debtors by taking shortcuts to minimize its own costs, while adding what the CFPB said was as much as $4 billion in interest charges to borrower loan balances. Navient illegally steered struggling borrowers facing long-term hardship into payment plans that temporarily postponed bills (while interest continued to accrue), the officials alleged, rather than helping them enroll in federal programs that cap payments relative to their earnings and offer the promise of loan forgiveness. Navient has denied the allegations. On Friday, U.S. District Judge Robert D. Mariani in Scranton, Pennsylvania, denied Navient’s motion to dismiss the CFPB lawsuit. Mariani wrote in his ruling that Navient’s argument that its activities complied with the Higher Education Act, Department of Education regulations, and its loan servicing contract with the Education department didn’t relieve the company of its obligation to not commit unfair, deceptive, or abusive acts in violation of the Consumer Financial Protection Act.
