Navient is fighting back after a published report indicated an audit of the student loan servicing giant conducted by the Department of Education revealed the company may have been steering individuals into higher-cost repayment plans without discussing lower-costing alternatives.
The article “continues the practice of ignoring facts to make false, sensational and harmful accusations that discourage borrowers from working with their servicers. Despite being in possession of the Federal Student Aid (FSA) review and our account-by-account response, the article repeated a series of false accusations that are not found in any section of the review,” wrote Navient President and CEO Jack Remondi in a letter to shareholders last week. “A full reading of the report, our responses included in the report and comments provided by the U.S. Department of Education clearly and unequivocally refute the accusations that Navient was improperly steering borrowers. They also affirmatively conclude that in those instances where forbearance was used, it was applied appropriately.”
Sen. Elizabeth Warren [D-Mass.], a vocal critic of the Department of Education and Navient, provided a copy of the audit to the Associated Press. The audit included listening in on 2,400 random calls between individuals with student loans and Navient representatives. That represented about 1.1% of the 219,000 calls made between 2014 and 2017. On about 10% of the calls, Navient representatives failed to ask questions that might help determine whether an income-driven repayment plan was the best choice for the individual.
“The federal loan programs offer over 50 different repayment options,” Remondi wrote in his letter. “Some are designed for long-term challenges and others are designed to address short-term challenges. Contrary to some views, no single option is always best or always worst. It always depends on the borrowers’ unique circumstances. The most expensive option is doing nothing and allowing the account to become delinquent and/or default. At Navient we help our customers select the option that best fits their needs. The results are crystal clear, borrowers serviced by Navient have the highest enrollment in income-driven repayment programs of all comparable servicers and are least likely to default.”
Navient is being sued by a number of states and the Bureau of Consumer Financial Protection for allegedly misleading borrowers by steering them into paying more than they have to, and failing to correctly apply payments to their accounts. The BCFP alleges that Navient’s practices allegedly added $4 billion in interest to individuals’ student loans, a figure that Navient disputes.
The audit made recommendations for how Navient could fix its policies and procedures, but made no formal requirements or mention of sanctions.