State attorneys say student loan company, Navient Corp., are misleading student borrowers about loan programs available to them. Moreover, Navient Corp. is giving incentives to their call center agents based on their skill to shorten calls, the state prosecutors claimed after conducting a two-year investigation against the said violator.
The attorneys presented their findings and suggested terms for legal settlement to Navient Corp last April 13 but the company has not yet responded. Navient Corp. is the nation's leading student loan company that has been servicing borrowers for more than 40 years now.
According to the company's official website, Navient Corp. used to be part of Sallie Mae but separated from it in 2014. Its main function remains to be providing loans for college students and federal, state and local governments.
Ideally and legally, student borrowers should be informed of all loan options they can avail but according to the complaining state officials, as reported by The Huffington Post, Navient draws potential clients to get temporary loans or those that defer payments which over time can acquire interest and make borrowers drowned in debt. There are other better choices that Navient doesn't inform borrowers about which the state attorneys see as neglect of their role. Aside from temporary loans, there are income-based types, endorsed by the White House, that require zero-dollar payments. These loans consider debt forgiveness especially on extreme cases when the student has no capacity to pay, his/her school unexpectedly closed, and/or cases of fraud happened.
Navient spokesperson Patricia Christel, in a statement to The Huffington Post, denied the allegations, stating that they are "simply inaccurate" and that their clients "are more likely to enroll in income-driven repayment plans."
Last year according to another The Huffington Post article, the Department of Education reminded Navient of its role and it has been said that the company has improved its loan servicing since then. Rewarding loan companies is in line with the efforts of the Obama administration to fix the growing debt problem incurred from student loans. Student debt amounted to $1.2 trillion around June 2015 which equate to social and economic costs such as decline of home ownership and entrepreneurship among others, as reported by the CNBC.
