Navient sued by teachers union

By Joe Dargan

The American Federation of Teachers sued Navient, one of the countries largest student loan servicers, on Wednesday for allegedly misguiding borrowers through a vital student loan forgiveness program.

The class action lawsuit filed Wednesday, on behalf of nine teachers and college professors, centers around the Public Service Loan Forgiveness program. Signed into law in 2007, the program is designed to provide an easier path to debt relief for eligible public service employees.

Qualified borrowers, such as teachers, firefighters, social workers and police officers who remain in their field for 10 years and complete 120 on-time loan payments, are eligible to have the remaining portion of their student loan balances forgiven.

According to the AFT, instead of guiding those eligible through the PSLF program, Navient, previously known as Sallie May, has been steering unsuspecting borrowers toward repayment programs and other forms of forbearance in order to “retain more fees for itself.”

Last year, the first borrowers became eligible to apply for loan forgiveness only to find that a whopping 96 percent of all applications would be denied according to a report issued by the Department of Education last week. The report says that only 96 out of the 29,000 applications were approved. Most were turned away for having the wrong loan type or missing or incomplete information.

The lawsuit details how employees of the Wilmington, Delaware-based company would tell borrowers they were on track for debt forgiveness regardless if they completed all of the necessary requirements for the PSLF program.

Earlier this year, congress passed a spending bill allocating $350 million for the Department of Education to extend eligibility to borrowers who may have inadvertently enrolled in the wrong repayment plan.

“Navient has purposely and systematically trapped teachers, nurses and other public service workers under a mountain of student debt instead of providing them with accurate information about their loan options and the loan forgiveness programs they qualify for and deserve,” said AFT President Randi Washington in a statement to the National Association of Student Financial Aid Administrators.

Just last year, Navient was hit with a federal lawsuit by the Consumer Financial Protection Bureau for allegedly deceiving student borrowers to the tune of $4 billion for similar practices.

A spokesperson for Navient said the company is not commenting on pending litigation.

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