New Jersey sues student loan servicer Navient, alleging ‘deceptive, misleading’ tactics

The state of New Jersey sued Navient on Tuesday, alleging that the student loan servicing company forced borrowers to pay and owe more money than necessary through misleading and deceptive practices.

In a lawsuit filed by New Jersey’s attorney general and division of consumer affairs, the state accused Navient of steering borrowers into loan forbearance — a temporary pause in payments due on a loan — and away from income-driven repayment plans, which typically extend the term and reduce the monthly payment owed.

New Jersey also says that Navient failed to inform borrowers about their requirement to recertify that they are eligible for an income-driven repayment plan and gave them inaccurate information about balances due and cosigner obligations.

“Higher education should be a pathway to success, not a road to financial ruin,” said state Attorney General Gurbir Grewal.

“With today’s lawsuit against Navient, we are taking action to hold one of the country’s largest student loan servicers accountable for abuses that made New Jersey borrowers worse off.”

Navient is responsible for collecting and processing student loan payments from more than 400,000 borrowers who received federal loans from the Department of Education. The company has faced a flurry of lawsuits from the Consumer Financial Protection Bureau (CFPB) and state attorneys general alleging similar mistreatment of borrowers.

“Not only are these recycled baseless allegations, Navient has consistently delivered excellent service to student loan borrowers, helping millions of people realize the benefits of higher education and successfully pay off their loans,” the company said in a statement.

“As a servicer for the federal government, we have led enrollment in affordable payment plans and driven down default rates. In fact, over half of the loan portfolio we service is enrolled in income-driven repayment.”

The CFPB has sparred with the Education Department for nearly three years over Secretary Betsy DeVos’s refusal to give the agency records relevant to its lawsuit and investigation of Navient.