Thursday, 15 Nov 2018

How the lawsuits against the student loan management officer Navient could affect you


If you have a student loan, you must monitor certain lawsuits.

Navient, the largest student loan service provider in the country, faces several lawsuits from attorneys general accusing the company of, among other things, directing borrowers to payment options that cost them more.

Last week, California Attorney General Xavier Becerra filed a lawsuit against Navient and two of its subsidiaries, Pioneer and General Revenue Corp. for borrowers with total and permanent disability.

Becerra said Navient provides about $ 300 billion in federal and private student loans to 12 million borrowers, of whom about 1.5 million live in California.

The issue in dispute is an alleged practice of encouraging "borrowers to defer payments by forbearance, option in which interest continues to accrue, rather than enrolling in a repayment plan based on on income that would avoid fees, "reported Danielle Douglas-Gabriel of the Washington Post. "Consumer advocates say credit companies are directing borrowers to forbearance because they need much less paperwork than putting them on low-cost plans that set monthly payments as a percentage of revenue. Navient has long been opposing one of the highest rates of enrollment in income-tested plans, denying the existence of a damaging plan to deny borrowers the ability to pay. 39; option. "

The lawsuit also includes Becerra's claims that Navient's subsidiaries violated California law, including providing false information about loan recovery fees that people were trying to circumvent and improperly informing borrowers, although requirement does not exist.

"Our students can not afford to lose more money than they legally owe, simply because Navient knew how to play with the system," Becerra said in a statement about the lawsuit.

The action in California is the latest lawsuit to be brought against Navient's practices. As reported Douglas-Gabriel, Navient faces similar lawsuits in Illinois, Washington, and Pennsylvania, as well as a lawsuit brought by the Consumer Financial Protection Bureau.

Navient returned to the trial in California.

"The allegations are unfounded, and the lawsuit is a new attempt to blame a single server agent for the failures of the higher education system and the federal student loan program to produce the desired results," Jack said. Remondi, President and CEO of Navient, in a statement. .

Despite the merits of the prosecution, as Loan Officer for the Department of Education, Navient is not wrong to point out the following in his response to the latest lawsuit against him:

– It does not set prices for tuition fees, which forces students to borrow as much.

– The company is not responsible for complex repayment options and registration requirements for borrowers (although it is expected to fairly inform students of their repayment options).

– This is not the first point of contact to advise students and families on the cost of a degree and how student loans could become a burden for the future. "All of these decisions are made before the service agent enters the scene," the company said. "If the parties were really interested in the real problems of higher education and student debt, they would focus on them. . . improve the financial literacy of students and their families and provide better information on the total cost of graduation and the cost of any debt incurred to fund this degree – before enrolling in college. "

Navient said the allegations in the various lawsuits are unfounded.

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In the past, Navient, formerly part of Sallie Mae, had to work with the government to overburden its military.

In 2014, the Department of Justice settled with Navient, which pays nearly 78,000 service members $ 60 million in compensation for billing excess interest on their student loans. The lawsuit alleged a national practice of not providing military members with the 6% interest rate limit for loans borrowed before the beginning of their military service, according to a statement from the Justice Ministry of the United States. time. The average check was about $ 771.

Neither Navient nor Sallie Mae have admitted or denied committing a wrongdoing. Remondi stated that the surcharges were due to "processing errors".

The Becerra office said that Californians who think Navient may have victimized them should file a complaint by, call 800-952-5225 or mail to: California Department of Justice, Public Inquiries Unit, PO Box 944255, Sacramento, Calif. 94244-2550.

From NerdWallet: Court Recourse: What Student Loan Borrowers Need to Know

Just in case you think that a student loan is a good debt, read the following columns:

– Yes, all debts are bad – even mortgages and student loans

– Debt: to hit her or to take her in her arms? My debate with Michelle Singletary.

The total debt for student loans exceeds $ 1.5 trillion. No matter what happens with Navient's lawsuits, the company thinks we should talk more about the amount of loans students and their families spend to finance college education.

Read more:

Color of money question of the week
Have you had any problems with paying your student loan? Send your comments to Please include your name, city and state. In the subject, write "student loans".

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What is the best credit card for students?

Since the financial pressure on students is already very high and many people are taking out loans, I do not recommend that they ease their burden by getting a credit card.

Instead, at least during the first years of college, let them learn how to manage money from their bank account. Find out how they manage a debit card without the security and cost of overdraft protection.

Last week, I asked: When did you receive your first credit card and what mistakes did you possibly make by using it?

Tom Martin from Woodbridge, Virginia, wrote: "My first credit card was for a gas station. More than 30 years later, I still have the same account, making it the oldest account of my credit report. For those who want to help their students acquire credit, I tell them to consider a gas station card. The main purpose of the card is to refuel, but if you check which petrol stations are near the college, you can arrange one for a gas station that also performs services Minor automobiles such as oil changes and state inspections. Neither the student nor a hacker can use the card for extravagant shopping. Large financial companies manage these card accounts and monitor account activity closely. If unusual purchases start to appear, the issuing company will ask the account holder to verify what is happening. This type of card is a good choice for a student who has enough sense to use it correctly. If the student is financially insane, it's as bad as any other credit account. "

Steve Tripoli of the District wrote: "My story is not about student cards, but about getting a very young card and how things have changed. I think this shows how much the consumer credit landscape has changed in a way that is not at all consumer-friendly. In the late 1970s, I was about three years out of college, I was earning about $ 10,000 a year as a journalist in a small town and I was already a long-time spooky dog ​​with zero debt. I had already saved about six months salary and bought a used car in cash. I asked for a Sears credit card and I was refused. Intrigued, I went to see the vice-president of my local bank (yes, you could do it at that time, but I also knew him as a journalist). He told me that I could not get a credit card, despite my excellent finances, because I had not yet established credit – a bit of a Catch-22. So he asked me to take out a six-month "booklet loan" guaranteed by $ 1,000 in my savings account – the interest rate would be 1% higher than my savings account. Of course, I paid for it quickly in six installments, I had my first credit card and the rest belongs to the story. "

Credit card of a registered friend Gretchen Stone from Maineville, Ohio. She wrote: "I have always used money and borrowed as little as possible to succeed in my medical studies. Just before finishing my residency in family practice, I bought a ticket for Hawaii that only cost $ 99 to go. But the airline went bankrupt while we were in a backpack, leaving empty desks and a recording suggesting we were making other arrangements. It was time for traveler's checks and I certainly had not brought enough for another plane ticket. Fortunately, I had a cousin with a credit card who loaned me money to go home. A few weeks later, fully qualified as a doctor, but no credit rating matches my name, my mother accompanied me to sign for a credit card in our small town bank. "

"I attended Brooklyn College from 1991 to 1995, and every day a new credit card company set up on the street just outside the college, between two buildings," writes Nikhila Pai from Berkeley, California. "As a freshman, I could not resist the free treats, frisbees and other junk food they offered. I was also very happy when I filled out the paper forms and that I was quickly approved. Eventually, I had 22 credit cards and kept them all in my wallet. I never spent money – I did not – but I loved how much I could spend. In a particularly long metro in a subway station, a thief opened my backpack and easily pulled out my wallet. Suddenly, I had to remember all these chocolate bars, frisbees and cards to report the theft. Fortunately, I loved the paper and I had proof of all the cards I owned. I ended up canceling everything but two and I never again cracked for the free swag. On my mother's advice, I would spend something from time to time using the cards to keep them active. Keeping these cards for decades and the occasional big buys (refunded quickly) have done my credit beautifully. When I had my university degree, I had no problem renting an apartment. Although I know it's silly to have 22 cards, I do not agree that zero card is a smart way to learn either. It depends on the child, but one or two PAS cards for emergencies, but more specifically for creating credit can be a useful tool. "

Janet Madigan from Herndon, Virginia, makes a good point about wearing a debit card. She wrote, "That a student has a debit or credit card, I think he has to know what to do in case of fraud. The debit card number of my daughter was stolen while she was at the university and billed $ 800 worth of products at an Australian pharmacy. Since she went to school in Boston and entered her bank the same day, it was easy enough to prove that she had not made that purchase. However, they told him that there might be a delay in returning his money to his account. This could spoil rent payments, etc., and she had to tap into emergency savings to ensure that the fraud would not have an even greater impact. She was lucky to have this savings account. (Not to mention the parents who insisted that she install one!)

Jayne Hansen from Houston wrote: "My first credit card arrived only five years after my graduation from college. In the late '70s and early' 80s, a single woman could not easily get a credit card. My father co-signed for my first car, but even though I paid 100% of all the payments, I could not get credit. I still remember that Sears rejected me and I've been blaming them ever since. Finally, American Express arrived and it was perfect for me. Anyway, I paid my balance every month, so it was win / win. Eventually, I was able to get all the credit cards I wanted, but I will always be grateful to American Express for trying their luck with a single woman who was still paying her bills on time. "

"At the time when I went to university in the mid-1970s, students did not have a credit card," wrote Steve Mueller from Austin. "The banks would not issue it if you did not have a verifiable income. In addition, credit card purchases were a manual affair. A multi-part credit card form would be run on a printer. You have signed this form and the merchant will give you a true copy. The merchant would keep another copy and the original (and another) would be deposited in the merchant's bank as a cash deposit. Eventually, the original and the copy would reach the company issuing credit cards. He would then send you a monthly statement with one of the coals as proof of your purchase. I was about 25 years old and I looked like a student, even though I had a full time job. The merchant looked me up and down. He wondered what kind of student had a credit card. He took charge. I have never seen a credit card slip processed so quickly! The purchase took place on May 15th and was transferred to my account on May 17th. Most of the time, these credit card slips had a life of 1 to 2 weeks! "

Kate Flynn from Reston, Virginia, wrote: "I had my first credit card around 1973, about a year before the end of my university studies. Glad to say that I have never made a mistake using credit cards. I have never paid a balance, paying in full each month. During all this time, there have been relatively few times when I missed or were late making a payment (related to a move or a long trip). All in all, I doubt that I paid more than $ 25 in interest. "

Laura McAfee of Catonsville, Md., wrote: "My mother made me an authorized user on her card while I was still in high school because she wanted me to do my shopping. At the time (at the Stone Age, in the 1980s), I thought that a credit card for emergencies was a reasonable choice because before the Internet, it was very difficult to move money very quickly. I went to college and so I had a different bank because the National Bank of Maryland did not have branches outside of the state. Plus, I never had more than a few hundred dollars on my account (I was also a fellow, so the only money I had was the part of my summer earnings that did not matter to me. was not used to pay tuition and all that I could earn by working). Oh, and if my parents needed to buy me a plane ticket, the airline should have sent me a paper ticket. In this situation, I thought it was perfectly reasonable for my mother to make me an authorized user on her credit card so that I could just go to the airport and buy a ticket on the first return flight if need. Now, however, when my daughter goes shopping, I can give her money in ten seconds. We both have bank accounts in the same bank. I'm using their app to transfer the amount she needs from our account on hers. She pays with her ATM card, which is also a debit card. And since our bank is a national bank, I plan to do exactly the same thing when she goes to university next year. With all the stress of choosing college, I'm happy I do not have to manage a credit card for her! "

Columns of the color of money this week
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