Navient Corp., the biggest servicer of U.S. student loans, must face a state lawsuit alleging widespread deceptive practices and predatory conduct, this time in Pennsylvania.
Navient will have to answer claims by the state’s attorney general, Josh Shapiro, that it
The decision comes as student-loan debt reached a record $1.465 trillion last month. Over 2.7 million borrowers owe more than $100,000, of whom about 700,000 owe more than $200,000, according to data from the U.S. Department of Education.
“We still have important work to do in the case,” Shapiro said in a statement that referred to the company’s “deceptive practices and predatory conduct.” But, he said, “this brings us one step closer in our fight to provide justice to the students and families in Pennsylvania and across the country who have been harmed by Navient.”
Navient spokesman Paul Hartwick declined to comment.
Illinois, Washington, California, Mississippi and the federal Consumer Financial Protection Bureau have also sued Navient over the practice. The suits claim Navient pushes borrowers into short-term plans that postpone their required payments instead of helping them enroll in plans that cap payments relative to income. The practice is faster and cheaper for the company, they say.
Mariani rejected Navient’s core argument that the Consumer Financial Protection Act bars states from bringing CFPA claims when there is already a pending lawsuit by the agency. The judge said Navient stands accused of using subprime borrowers “as pawns in Navient’s quest for profits.”
