N.J. AG Sues Navient, Alleging ‘Unconscionable’ and ‘Deceptive’ Practices

The Attorney General of New Jersey yesterday filed a lawsuit against student loan servicing giant Navient, accusing the company of engaging in “unconscionable” practices, “deceptive” conduct, and making misrepresentations when collecting on loans owed by residents of The Garden State.

A copy of the complaint can be accessed by clicking here.

Among the accusations made in the complaint are alleging that Navient steered borrowers into forbearance programs instead of income-driven repayment plans that “would be better suited to their financial circumstances,” failing to inform individuals about deadlines to recertify their eligibility for income driven repayment plans, misleading individuals about how much they owed, and encouraging individuals to obtain a cosigner for their student loans and then “making it exceedingly difficult” to obtain a cosigner release.

“Higher education should be a pathway to success, not a road to financial ruin,” said Attorney General Gurbir Grewal in a statement. “Yet even before the financial fallout from the COVID-19 pandemic, too many New Jerseyans were struggling to pay off their student loans. And the financial situation of too many student loan borrowers was made worse because their loan servicers put corporate profits above the borrower’s best interests. With today’s lawsuit against Navient, we are taking action to hold one of the country’s largest student loan servicers accountable for abuses that made New Jersey borrowers worse off.”

The complaint alleges two violations of New Jersey’s Consumer Fraud Act and seeks borrower restitution, injunctive relief to prevent using unlawful acts in the future, and disgorgement of any “ill-gotten gains,” according to a press release announcing the lawsuit.

Navient denied the allegations.

“Not only are these recycled baseless allegations, Navient has consistently delivered excellent service to student loan borrowers, helping millions of people realize the benefits of higher education and successfully pay off their loans,” the company said in a statement, according to a published report

. “As a servicer for the federal government, we have led enrollment in affordable payment plans and driven down default rates. In fact, over half of the loan portfolio we service is enrolled in income-driven repayment.”