A secret report. Unpublished findings. Embarrassing revelations. Crime thrillers, courtroom dramas, and political intrigue often begin under similar plot devices. Unfortunately, the plot quickly becomes destructive and wearying when the dramatic players are entrusted with the welfare of millions of lives. A recent leak of a Department of Education (DOE) unreleased Navient audit appears to show that the nation’s biggest student loan servicer steered borrowers to higher-cost plans. Rather than discuss more affordable options, such as income-driven repayment plans (IDRs), Navient suggested forbearance to overwhelmed borrowers.
The Associated Press obtained a copy of the 2017 audit from Sen. Elizabeth Warren, D-Mass., who has been a critic of both Navient and the policies of DOE Secretary, Betsy DeVos.
A Consumer Financial Protection Bureau (CFPB) lawsuit against Navient prompted the DOE audit of the loan servicer’s practices. The CFPB accused Navient of pushing financially troubled borrowers into forbearance. Forbearance allows borrowers to stop making payments for up to three years. Unfortunately, interest continues to pile up, increasing the overall cost of loans to borrowers. A borrower carrying $30,000, for example, who opts for three years of forbearance, increases their loan balance by $6,742, an increase of more than 20 percent.
CFPB claimed in its lawsuit that, from 2010 to 2015, Navient caused borrowers $4 billion dollars in increased balances. Navient vehemently disagrees that its practices pushed borrowers into forbearance and that it cost borrowers this amount of money.
Warren may have released the document because DOE, despite federal and state lawsuits, refused to report audit findings. She claimed in a tweet, “Student loan giant Navient denied allegations that it cheated student borrowers — while sitting on a federal audit that proved it had done just that.” Warren wants to hold the Navient accountable for “sabotaging students,” and “lying to the public to cover it up.”
In response, Navient has issued a press release in which it says it supports enhancements to the student loan program that are in “the best interest of the borrower.” They claim that “We promote repayment options, including IDR, in 154 million communications annually. Navient serviced borrowers are 37 percent less likely to default than borrowers serviced by our peers.” Further, Navient states that forbearance is often required initially so that borrowers can enroll in IDRs.
Some public service workers, though, feel that Navient cost them years of payments. According to a recent lawsuit filed in October, Navient representatives steered borrowers into forbearance, rather than into the Public Service Loan Forgiveness program (PSLF). The goal of PSLF is to forgive the loan balances of public service workers after ten years of payments. In existence for more than 11 years, PSLF has, at last count, only forgiven 96 borrowers.
Does Audit Support Allegations?
Despite the ineffectiveness of PSLF, these teachers feel that Navient should have provided better information. They also believe the released audit proves them right. “This audit report we believe supports the allegations we’ve made in our complaint,” said Lena Konanova, attorney for the nine teachers suing Navient.
Jack Remondi, CEO of Navient, vehemently denies the allegations. “We are proud of these industry leading results and I am proud of the work our team does each and every day to assist borrowers.” Remondi claims “false accusations” unsupported by facts discourage borrowers from “engaging with their services.”
In any who-done-it, it can be difficult to assign blame, especially when everyone claims that someone else is the culprit. The broader plot outline remains. More than 44 million people owe over $1.5 trillion, many of them overwhelmed by their monthly payments. Every drama needs a hero, a supersleuth or superhero. Who can these borrowers look to for help?