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Student loan servicer navigator illegally tricked borrower, judge finds

Student loan servicer navigator
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Washington state courts trusted illegally deceived borrowers, parents, grandparents, and others when they co-signed a relative’s student loan and misunderstood what it took to release them from their obligations.

A ruling released last month on Friday has violated consumer protection laws since state law enforcement and the federal government tightened proceedings against Navient over student loan service practices for nearly four years. It shows that the court found it for the first time. Before.

“There are too many student loan borrowers in Washington to have a hard time floating,” Washington Attorney General Bob Ferguson, who filed the proceedings, said in a statement. “We continue to hold accountability for Navient’s misconduct and student loan bailouts against thousands of mistreated Washington citizens.”

The ruling was issued as part of the proceedings filed By Washington State in 2017 Eventually it cost more money to the borrower, claiming that the company illegally made the student loan repayment process more difficult in various ways. The proceedings also alleged that Navient’s predecessor, Sally May, illegally seduced borrowers into expensive loans they couldn’t afford, resulting in high default rates.

Other allegations in the case are transferred to trial. In addition, some proceedings against Navient over similar allegations include Submit one The Consumer Financial Protection Bureau is about to break through the legal system on the same day as Washington.

Navient Said The claims in the Washington proceedings and other similar proceedings were “unfounded,” and the company “is confident that it will win after reviewing the facts.” Navient’s lawyers have filed a motion to dismiss these proceedings, including the Washington proceedings.

This ruling relates to the ability of parents, grandparents, etc. to be released from their relatives’ student loans.

The policy at issue in the ruling, known as the liberation of co-signers, is unique to the private student loan market. Student loan borrowers often have thin credit files, so lenders require parents, grandparents, or other close contacts to co-sign the student loan. In some cases, even if you don’t need a co-signer, you can help the borrower receive a lower interest rate.

Lenders usually promise that the co-signer can apply for debt forgiveness after a successful repayment. The idea is that once the borrower’s education provides them with sufficient degree and income potential to handle the loan on their own, their relatives no longer need to be held accountable.

In reality, it can be very difficult for co-signers to be released from their obligations.about 90% of co-signers According to a 2015 report from the CFPB, those who applied for release from the loan were rejected.

Washington argued that if the loan was overpaid, Navient would deny the co-signer’s progress towards liberation. For example, according to court documents, if a borrower borrows $ 100 a month, but pays $ 400, the company advances the invoice by three months and $ 0 during the month. I will send you an invoice. If the borrower did not remit the payment in response to those charges, the company did not count those months as the period of successful repayment required to release the co-signer.

According to court documents, borrowers typically had to make payments within 12 to 48 consecutive months before applying for the release of the co-signer. The proceedings alleged that if the borrower did not send the payment in response to the $ 0 bill, the Navient would resume the watch with the required consecutive monthly payments.

Washington argued that Navient’s interpretation of what was counted as consecutive in-time payments was different from how the company described the process to borrowers and co-signers.

“The only requirement is that the” on-time … payment “must be continuous. There does not have to be a series of “months” or “billing cycles” for scheduled payments. This requirement also doesn’t mention months or billing cycles, “the state said in a court document. “There is nothing [Navient’s] Advise borrowers that invoices, their websites, or other consumer documents may affect the co-signer’s eligibility for release if they do not pay for the $ 0 charge. Did. ”

Since 2014, Navient has revised its policy so that lump sum payments are considered multiple monthly payments.

Navient spokesman Paul Hurtwick said in a statement that the company was “disappointed” with the court’s decision to disclose the release of its co-signer.

“We believe our disclosure is clear and fairly applied under Washington state law,” Hartwick said in a statement. “Navient’s focus is and will continue to help student loan borrowers pay off their loans.”

Stakeholders are watching the Biden administration’s approach to student loan policy

The challenge of being free from co-signed private student loans has long been argued by borrowers and government officials that student loan companies are exacerbating the $ 1.7 trillion student loan problem in our country. This is one of the methods. They are obstacles to successful repayment of both student loan servicers (a company hired by the government to manage the repayment process of federal student loan borrowers) and companies that take personal loans directly to students in court documents and elsewhere. Claims to have thrown.

Stakeholders are monitoring the Biden administration’s approach to these issues.US Department of Education In the middle It is one of the long-standing processes of overhauling student loan service systems and can affect the approach of companies that manage federal student loans and the companies hired to do so.

In addition, experts say that the Consumer Financial Protection Bureau More aggressive approach To monitor student loan companies hired under the Obama administration. Biden’s candidate to lead the CFPB, Rohit Chopra, was the agency’s first student loan ombudsman and a key designer of CFPB’s strategy for corporate and student loan issues.

At a confirmation hearing, Chopra worked with the Attorney General of the State, the Ministry of Education, and state accreditation bodies to ensure that student loan companies act when student loan payments and collections resume. Has a big role to play. ” Legally “you can avoid the default avalanche”.

“It’s important for loan servicers to fulfill their obligations,” he said.

Navient is one of the companies that serves the federal student loan portfolio on behalf of the government. In that sense, it acts as the borrower’s primary point of contact throughout the repayment process.

The company also offers private student loans and manages the repayment process for borrowers who have taken out loans through commercial lenders.

Student loan servicer navigator illegally tricked borrower, judge finds Student loan servicer navigator illegally tricked borrower, judge finds

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