“Higher education should be a pathway to success, not a road to financial ruin,” state Attorney General Grewal said as he and the Division of Consumer Affairs filed a lawsuit Tuesday against one of the nation’s largest student loan servicers, accusing it of failing to meet its obligations to New Jersey’s student loan borrowers or provide them with services in a fair and honest manner.
The state has filed suit against Navient Corp. and Navient Solutions LLC, alleging “unconscionable commercial practices, deceptive conduct, and misrepresentations” when servicing thousands of New Jersey consumers’ student loans.
As of June 2020, “Navient was servicing the loans of 168,900 federal student loan borrowers in New Jersey, who collectively owed over $7 billion in federal student loans,” according to a press release from the attorney general’s office. “In addition, Navient also originates and services private student loans, including for New Jersey student loan borrowers.” Navient, formerly known as Sallie Mae, Inc., services the loans of more than 12 million borrowers nationwide, with more than $300 billion in federal and private student loans.
The allegations, which cover events in the past decade, include:
- Steering borrowers into forbearance instead of income-driven repayment plans better suited to their financial circumstances;
- Failing to inform borrowers of deadlines to recertify their eligibility for certain income-driven repayment plans;
- Enticing borrowers to take out private student loans with a co-signer, then making it exceedingly difficult to obtain a co-signer release;
- Misleading borrowers about the amount of their delinquency.
The average New Jersey borrower carries $36,500 in student debt, among the highest in the country; student loan debt is circa $1.7 trillion nationwide.