Major student loan company may have pushed borrowers toward higher-cost plans: report

Major student loan provider Navient may have driven tens of thousands of borrowers into plans with higher repayment costs, according to Department of Education audit obtained by The Associated Press.

Navient, the third-largest student loan servicing company in the U.S., has been sued for boosting its profits by leading some borrowers into the high-cost plans without offering others that would have been less costly.

The conclusions of a 2017 audit would support those state and federal lawsuits. The department has not shared the findings with the plaintiffs in those suits.

{mosads}Despite the department’s knowledge of the report, Education Secretary Betsy DeVos has repeatedly argued that state and federal authorities cannot oversee loan collectors like Navient.

“The existence of this audit makes the Department of Education’s position [on the Navient lawsuits] all the more disturbing,” Aaron Ament, the president of the National Student Legal Defense Network, told AP.

As part of their inquiry, Education auditors reportedly listened in on about 2,400 randomly selected calls to borrowers from 2014 to 2017 out of a batch of 219,000. On nearly one out of 10 calls, Navient did not mention other options, including one type of plan that estimates the size of a monthly payment the borrower can afford based on their income.

In a statement to The Hill, Education Department spokesperson Liz Hill pushed back on AP’s characterization of the investigation into Navient.

She said that the report did not prove Navient was “improperly steering borrowers into forbearance” and that there was no evidence of “non-compliance with contractual requirements.”

Additionally, Hill pointed out that Navient’s overall use of forbearance was consistent with that of other loan providers, and that it had “been applied appropriately to resolve short-term issues related to delinquency consistent with the borrower’s circumstances.”

A spokesperson for Navient responded to The Hill with a letter they sent to shareholders earlier Tuesday, accusing AP’s report of “ignoring facts to make false, sensational and harmful accusations that discourage borrowers from working with their servicers.” 

The letter also referred to the Education Department’s argument that the internal review was inconclusive about whether other options were sufficiently discussed.

Updated at 8:21 p.m.