The California Justice Minister announced on Thursday that he was suing the country's largest student loan processor, claiming he was hurting consumers for failing to properly service the debt.
Attorney General Xavier Becerra said the state will file a lawsuit against Navient Corp. this week. The Delaware-based company was causing financial damage to thousands of Californians.
He said the company had systematically and illegally failed to properly service federal student loans by charging borrowers for more expensive repayment plans and not telling them how to switch to income-related plans or how people with disabilities could end their debt and misrepresent them could handle how she dealt with payments.
"Nobody should have shaken his American dream because a credit service company cheats these future leaders of a chance to get ahead," said Becerra Democrat running in the November elections
Navient President and CEO Jack Remondi called the allegations unfounded and that Law "Another attempt to blame a debtor for the failure of the higher education system and the federal student loan program to achieve the desired results."
"The need to blame someone has fueled these processes," Remondi said in a statement on the company's low default rates and high participation in alternative repayment programs
Approximately 4.6 million Americans have been to the Department of Education since December with their student loans in default. That's more than twice what it was four years ago, and more than 1
Of the approximately 12 million borrowers serviced by Navient, Becerra said approximately 1.5 million
Becerra said that Navient also assigned thousands of delinquent loans to its subsidiaries, Pioneer and General Revenue Corp., claiming that these affiliates had the Borrower deceived over their options.
The state could demand debt relief and repayment of overpayments "Forgiveness of loans and other remedies," Becerra said.
Publicly traded Navient was formerly part of Sallie Mae, which began as a government entity that funded state education loans. Navient became a separate company in 2014.
The US Tax Bureau for Consumer Protection and Lawyers in Illinois and Washington sued Navient early last year for similar violations. The Attorney General of Pennsylvania sued the company in October for its riskier subprime student loans.
Last month, the Trump administration announced that it would close the Student Credit Bureau, potentially restricting the investigation of corporate abuses in the $ 1.5 trillion credit market
. The Federal Office investigated and sued also the nonprofit educational institution Corinthian Colleges.
On Wednesday, a federal judge in San Francisco dismissed a separate Becerra lawsuit alleging that Trump's government was illegally bucking a promise from the Obama era. Quickly hand over loans from Corinthian students. The magistrate gave the state 30 days to show that he has the right to sue the US Department of Education.
Copyright Associated Press