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Navient Corporation recently announced to shareholders plans to end its current student loan servicing business following a number of scandals and government lawsuits. The one-time leader in the market plans to transfer millions of student loan borrower accounts to the Missouri Higher Education Loan Authority (MOHELA).
In 2014, Navient was the largest student loan company in the world, managing more than 12 million accounts of student loan borrowers. The organization has since faced numerous consumer protection lawsuits from state and federal regulators and continues to defend itself against allegations of cheating millions of customers out of their rights to affordable loan payments.
Despite exiting the market, the company still collects on roughly $40 billion in government-regulated loans, which originated under a federal student loan program and $17 billion in private education loans.
The organization has a track record of scandal and alleged abuse, including attorneys general of six states suing for violating borrowers’ rights, illegally overcharging nearly 78,000 service members by ignoring the interest maximum and forcing borrowers to pay more than necessary on their loans. This resulted in $4 billion in unnecessary interest charges and fees.
In a release, Student Borrower Protection Center (SBPC) executive director Mike Pierce expressed mixed emotions regarding Navient’s decision to exit the market, stating the company had engaged in abuse and fraud and caused further financial hardship for people with student debt.
“In selecting MOHELA, Navient found its corporate soulmate – a firm that is fundamentally incapable of delivering high-quality service to its customers,” Pierce said. “Navient’s exit from the student loan servicing market is welcome news, but it is not a substitute for justice. Borrowers deserve debt relief, not another shady financial firm collecting these illegitimate debts.”
This transfer of accounts from one servicer to another will impact millions of borrowers. Many borrowers are currently experiencing uncertainty about how to make their payments on top of other debt burdens, and this transfer may only heighten concerns and financial distress. For those experiencing financial distress from student loan payments, bankruptcy may be an option to help ease this burden.
If you are interested in exploring how filing for bankruptcy may ease your financial distress from student debt, contact a member of our team at Sader Law Firm today at (816) 561-1818 for a free phone consultation and information on what will work best for you.
