5 months ago
Sadly enough, the amount of student loan debt in the US has tripled over the past decade, and now it’s over 1.5 trillion. Even more staggering is the fact that loan payments are proving to be unmanageable. So, according to Federal Reserve Bank of New York report, by 2023 about 40% of student borrowers will default on their education loans. While turning to loan providers, students are often misled as to the gist of their repayment plans. One of the most popular student loan providers, Navient, has reportedly been forcing more costly plans on borrowers according to reports from NPR. The Typical Student team learned the details.
Is Navinet Misleading Student Borrowers?
FSA suggests Navinet has constantly been steering the borrowers into more costly repayment options. These allegation have been put forward after “a team from Federal Student aid listened to 2,388 calls shorter than 5 minutes between student loan borrowers and Navient, a publicly traded company.” According to the FSA team, in about 10% of calls, Navient customer service offered callers the forbearance option, which allows putting loan payments on hold for a specific period of time.
Still, there’s one important detail to the interest rate that continues to accrue despite loan payment being put on hold. Eventually, by the time a borrower figures all that out, there’s a significant amount of expense “piled” over time. The FSA put their findings in a report titled Navient Use of Forebarance Site Report dated May 2017. The report also unveiled that Navient often would withhold other available repayment options from the borrowers.
Navinet Held Accountable For Its Practices
Source: Boston Globe
The 2017 FSA report wasn’t published until Senator Elizabeth Warren facilitated making it public. Senator Warren gave the report to the Associated Press, who then published it this past Tuesday. The Consumer Financial Protection Bureau sued Navient in 2017. The lawsuit was initiated partly due to the economic-hardship forbearance forcing students to pay an extra $6,742 in interest on the loan. Five states also brought a lawsuit against Navient.
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