The American Federation of Teachers has filed a lawsuit against Navient, accusing the student loan servicing giant of steering borrowers into repayment or forbearance programs that made teachers ineligible for a federal loan forgiveness program.
Making the matter more interesting, Seth Frotman, who resigned in a blaze of glory in August as the student loan ombudsman at the Bureau of Consumer Financial Protection has lent his name and clout to the plaintiffs in this case.
A report, issued last week by the Department of Education, revealed that it has approved only 96 out of the 29,000 applications for forgiveness under the Public Service Loan Forgiveness plan. The plan offered individuals with student loans the chance to have those loans forgiven if they work in a public service sector job for 10 years and make 120 timely payments on their student loans. The program was launched in 2007 and the first group of individuals who are eligible for loan forgiveness started filing applications last year.
“For too long, the student loan industry has not been held to account for its failures,” Frotman said in a published report. “Today is about getting them much needed justice.”
In suing Navient, the AFT alleges the company contributed to the lack of individuals who are eligible to be approved for the program because it steered borrowers into programs that would render the individuals ineligible for the forgiveness program.
“No one goes into public service to strike it rich; they do it out of a deep commitment to students, patients and the public good,” said Randi Weingarten, the president of the AFT, in a statement. “But we cannot attract the best and brightest to these careers if promises of debt relief are deliberately broken.”