CFPB sues student loan giant Navient
Navient Corp. was sued by a U.S. regulator over allegations that the student loan giant "systematically" cheated borrowers.
The company, formerly part of Sallie Mae, failed to properly service private and federal loans, provided incorrect information to borrowers, improperly processed payments and didn't respond to complaints, the Consumer Financial Protection Bureau said in a statement Wednesday announcing the lawsuit.
"For years, Navient failed consumers who counted on the company to help give them a fair chance to pay back their student loans," CFPB Director Richard Cordray said in the statement.
Navient, based in Wilmington, Delaware, disclosed in a November filing with the Securities and Exchange Commission that it had received notice of the probe from the CFPB almost three years ago. The company — the largest servicer of U.S. student loans — said the regulator was considering fining the company, demanding customer restitution and calling for changes in business practices.
The lawsuit calls for Navient, which services more than 12 million borrowers, to stop any "illegal conduct" and pay back harmed customers.
Navient spokeswoman Patricia Nash Christel didn't immediately respond to a request for comment.
Illinois Attorney General Lisa Madigan's office has said it's also leading a multi-state investigation into Navient. Maura Possley, a spokeswoman for Madigan's office, didn't immediately respond to a request for comment.
Navient handles a portfolio of about $300 billion in private student loans and acts as a servicer for the Department of Education. In 2014, the company created a $60 million fund to compensate borrowers after the Department of Justice accused it of violating the rights of military members by failing to give them an interest-rate cap they were due.