- The Washington Times - Monday, January 21, 2019

The nation’s largest student loan servicer is pushing back in court against the federal Consumer Financial Protection Bureau’s claims that it deceived hundreds of thousands of borrowers, arguing that the bureau can’t even find one person harmed.

Navient said in court documents that after years of investigating, the CFPB hasn’t proven that the company treated borrowers unfairly or “steered” them into costlier payment plans.

“Two years after filing suit — and more than five years after launching its investigation — the CFPB has not only failed to show that ‘hundreds of thousands’ of borrowers were harmed, it has not identified a single borrower who supports its allegations of ‘steering,’” Navient said late last week in the motion for partial summary judgment. “The CFPB ultimately named only 15 people who experienced the alleged misconduct. All but one have been deposed, and all testified that Navient repeatedly advised them about income-driven repayment.”

Navient chief legal officer and Executive Vice President Mark Heleen said in a statement, “After three years of investigating and two more years of litigating, the CFPB’s witnesses contradict the bureau’s claims. In fact, the experiences of these borrowers demonstrate Navient’s extensive efforts to inform people about their repayment options and underscore our calls to make federal plans simpler.”

The complaint by CFPB was one of the last filed during the Obama administration, coming two days before President Trump’s inauguration in January 2017. Republicans accused former CFPB director Richard Cordray of overreaching the agency’s authority in a broad range of consumer enforcement against lenders; the Trump administration has scaled back its operations.

Navient’s assertions in court documents show that it considers the case another example of the CFPB trying to regulate through enforcement action.

In its filing in the U.S. District Court for the Middle District of Pennsylvania, Navient is asking the judge to throw out the two most significant claims against it. The CFPB has alleged “unlawful acts and practices in connection with defendants’ servicing and collection of student loans” and is seeking unspecified restitution, refunds, and financial penalties.

The company says there are no examples of servicers misleading borrowers to move them into more expensive payment plans. The CFPB identified 15 borrowers who claimed misconduct, but Navient said all but one have been deposed and they acknowledged being given options.

Navient cited numerous examples where it said it wasn’t to blame for borrowers’ difficulties. One borrower, identified by the initials R.D., “continued to miss payments on her student loans while consistently making payments on two luxury automobiles,” Navient said in its filing.

The publicly traded company also said several borrowers identified by the consumer bureau as being victimized didn’t qualify for income-based payment plans under Education Department guidelines because their income was too high.

Navient pointed to another borrower whose initials are C.C.

“In March 2016, a Navient phone representative asked CC about her family size and income, and CC responded that her income was $450,000 per year,” the court filing stated. “When the representative told CC that she would not qualify for [income-driven repayment], CC responded (falsely) that her husband did not actually have any income because of a recent health issue and that her income was $4,000 per month.”

Navient said it learned that C.C. and her husband had purchased a home in the Chicago area in 2012 for $1 million.

“Student debt is indeed a challenge for many Americans, and Navient is dedicated to supporting borrowers, continuous enhancements, and working with policymakers to simplify and improve the federal program,” the court filing said. “The CFPB cannot meet its burden to show a genuine dispute of material fact with respect to whether Navient informed borrowers about [income-driven repayment]. At a minimum, a ruling as to Navient’s conduct toward the identified borrowers would serve to define the relevant issues for trial.”

Sen. Elizabeth Warren, Massachusetts Democrat who helped to create the CFPB, criticized Navient in November as she highlighted an Education Department review in 2017 of its performance. She said the report “bolsters allegations that Navient illegally cheated struggling student borrowers out of their rights to lower repayments.”

A team from Federal Student Aid listened to 2,388 calls between Navient customer services representatives and borrowers, finding that in about 9 percent of cases, a Navient employee only offered the option of forbearance. Forbearance allows borrowers to stop payments temporarily due to hardship, but interest continues to build and can result in costlier terms.

But Navient’s overall use of forbearance was consistent with other servicers, according to the review. And Navient CEO Jack Remondi told shareholders at the time that the report “clearly and unequivocally refute the accusations that Navient was improperly steering borrowers.”

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