Consumer agency sues Navient over student loan repayments
Associated Press
WASHINGTON
Federal regulators have sued Navient, accusing the biggest U.S. student loan company of making it harder for borrowers to repay loans by giving them bad information, processing payments incorrectly and failing to act on complaints.
The Consumer Financial Protection Bureau filed the federal lawsuit against Navient Corp. and two subsidiaries on Wednesday seeking restitution for affected borrowers and money penalties. The agency said the company also cheated struggling borrowers out of their rights to lower their payments “through shortcuts and deception.”
Navient disputed the allegations, calling the suit a politically motivated “midnight action” two days before the Trump administration takes office.
“We will vigorously defend against these false allegations,” the company said in a statement.
Republicans have opposed the CFPB, which was created by the financial overhaul law enacted following the 2008 crisis. Some Republican lawmakers want President-elect Donald Trump to fire the agency’s director, Richard Cordray, after he assumes office.
The consumer watchdog agency has been enmeshed in partisan politics since its creation in 2010. And in October, a federal appeals court ruled that its structure is unconstitutional because it gives too much power to a single agency director.
The court ruled that the way the CFPB is organized violates the Constitution’s separation of powers by limiting the president’s ability to remove the director.
Washington state and Illinois filed their own suits against Navient on Wednesday, lodging accusations of unfair and deceptive practices.
The company also disputed the state actions.