Navient chief to CFPB: 'Time to move on'
Navient Corp. is turning up the heat on the Consumer Financial Protection Bureau, issuing a direct public call for the dismissal of the agency’s 18-month-old lawsuit against the student loan servicing firm.
During a call with analysts on Wednesday, Navient CEO Jack Remondi complained that nearly five years have passed since the consumer bureau issued its first demand for documents from the Wilmington, Del.-based company.
“You’ve had five years to look for your evidence, you’ve found none,” he said. “It’s time to move on.”
The CFPB filed suit against Navient in January 2017, when former Director Richard Cordray was still at the helm.
The bureau alleged that the nation’s largest student loan servicer added $4 billion in interest charges to the principal balances of borrowers who were enrolled in multiple, consecutive forbearances, and that a large portion of the charges could have been avoided if the company had followed the law. Navient has contested the allegations vigorously.
Remondi’s comments come at a critical stage of the litigation, and could reflect a belief that the company will get a more sympathetic hearing from Trump administration officials than it did from Obama appointees.
In a recent court filing, the CFPB said that the Department of Education, led by Secretary Betsy DeVos, is refusing to authorize Navient to turn over certain documents that the consumer bureau wants to see.
The bureau asked the judge in the case to grant a five-month extension to the discovery process, arguing that the agency has not received documents that it needs to identify harmed borrowers and quantify the damages they suffered.
After Mick Mulvaney took over as the CFPB’s acting director, the agency moved its student loan division into another unit, a move that consumer advocates feared would hamper its lawsuit against Navient.
“Mr. Mulvaney’s action is a naked ploy to silence an effective team looking out for student loan borrowers,” Persis Yu, staff attorney at the National Consumer Law Center, said at the time.
In addition to the CFPB’s lawsuit, Navient faces allegations of consumer abuses by the states of Pennsylvania, Illinois, California and Washington.
Navient, which was split off from SLM Corp. in 2014, assumed the liabilities of the predecessor company. The conduct at issue in the lawsuits dates back more than a decade in some cases.
Navient disclosed in April that it spent $4 million in regulatory-related legal expenses in the first quarter, virtually all of it in connection with the CFPB case and related matters.
During Wednesday’s call, Remondi said that the lawsuits against Navient do not address what he described as the real issues facing the nation’s student loan borrowers, and he called attention to the company’s recommendations for how to improve borrower outcomes.
Those recommendations include encouraging delinquent borrowers to respond to messages from their loan servicers.
At the same time, Remondi accused the CFPB of reaching its conclusions about Navient prematurely.
“This process has been backwards from the start,” he said. “It began with the conclusion that the problems student loan borrowers were experiencing were caused by improper servicing, then they look for examples. However, the ongoing search for evidence to support this claim continues to come up empty-handed.”
A CFPB spokesman did not respond to a request for comment.
Mulvaney weighed in on the case during a January 2017 Senate hearing on his nomination to be White House budget director, 10 months before he would become acting director of the CFPB.
Asked about the bureau’s role in the Navient case, Mulvaney, a longtime critic of the CFPB, said: “I absolutely do believe it’s a good idea to have an organization that would enforce the law. I would question whether or not the CFPB is the best way to do that.”
Mulvaney went on to say that the misconduct alleged in the case, if the allegations are accurate, would be illegal whether or not the CFPB existed.