Consumer complaint received 2024-05-03
Product: Student loan — Federal student loan servicing
Issue: Struggling to repay your loan — Problem with forgiveness, cancellation, or discharge
Company: Navient Solutions, LLC. (NH)

XXXX of students were scammed by Sallie Mae - Navient into taking out predatory private loans to attend for profit online schools such as the one I attended, XXXX XXXX between XXXX XXXX XXXX. 
As a matter of fact, XXXX  XXXX XXXX and their Parent company, XXXX were investigated by the attorneys general of several states and have been found to have acted in a fraudulent manner. 
Because of the numerous claims of fraud and misconduct perpetrated by XXXX XXXX XXXXXXXX, the Biden administration has just announced a blanket discharge for anyone enrolled at XXXX XXXX XXXXXXXX from XX/XX/XXXX to XX/XX/XXXX. 
My Federal loans in the amount of ( Your amount here ) were discharged and my credit repaired. 
I am aware that Navient was sued by 39 state AGs regarding their predatory loans to attend these online for-profit schools and that Sallie Mae/Navient were a " preferred '' lending company in a " deal '' with these schools during the early XXXX XXXX 
These private loans with a high risk of default were part of a package deal offered to " for profit online schools '', but loans made to students in states outside of the agreement, or those who were not in default for 7 months or more during a " specific '' time frame, were excluded. 
I am sure this was a big win for Navient, but what a sham of a settlement deal for the rest of borrowers scammed into taking loans to at least XXXX for profit online schools. 
After the AG settlement, didn't Navient also get out of the Federal student loan business due to scrutiny from lawmakers and borrower advocates? 
Didn't Navient have to pay restitution to the Federal student loan borrowers for not informing students of IDR/IBR payments students could have enrolled in, but instead steered toward forbearance? 
Furthermore, hasn't Navient been sued at least a half dozen times for other predatory loan practices and illegal collection practices? 
I am also aware of a " pilot '' program by which Navient is sending out " applications '' to select students who may have filed Borrower Defense claims against their schools and were approved. 
This application is a sham. 
Why do we need to prove anything? 
Navient knows who we are. 
Under the FTC " Holder Rule '' Navient is liable for giving predatory loans in connection with online for-profit schools. 
Time is running out for Navient to do right by students who were scammed into taking out private loans to attend online for profit colleges who have committed misconduct and misrepresented themselves to the public to entice students to enroll. 
Senator XXXX XXXX has sent a letter to Navient 's CEO asking to discharge these loans NOW! It's time Navient do the right thing and discharge all these predatory private loans made to attend online for profit schools NOW! 

XXXX XXXX XXXX XXXX & XXXX XXXX XXXX The Navient Corporation XXXX XXXX XXXX, XXXX XXXX XXXX, DE XXXX XXXX XXXX : We write to urge the Navient Corporation to cancel the decades-old, predatory student loans in its portfolio that are governed by the FTCs Holder Rule and subject to claims and defenses based on well-established school misconduct and predatory lending. From XXXX to XXXX, Navient, then known as Sallie Mae, in coordination with fraudulent for-profit schools, pushed predatory, subprime loans onto borrowers likely to default.1 These schools lied about their credit transferability, career prospects, and otherwise misled students while Navient profited off the government backing of the loans students took out to attend them.2 Because of Navients coordination in this process, your company should provide relief to borrowers immediately, before the impending servicing transfer of these and other student loans to the XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX  XXXX XXXX XXXX XXXX Navient Will Soon Transfer Millions of Student Loans to XXXX On XX/XX/XXXX, Navient announced it will outsource the servicing of XXXX XXXX student loans to XXXX in the coming months.3 But a large portion of these loans are eligible for cancellation. Navient is aware that borrowers have meritorious defenses to the enforcement and collection of these loans, and has set aside at least {$35.00} XXXX in anticipation of claims or defenses being brought against Navient for misconduct.4 But Navient makes it nearly impossible XXXX XXXX XXXX XXXX The {$1.00} XXXX Student Loan Deal That Was Too Good to Be True, XXXX XXXX XXXX XX/XX/XXXX, XXXX XXXX XXXXXXXX. XXXX XXXX XXXX XXXXXXXX, Loans Designed to Fail : States Say Navient Preyed on Students, XXXX XXXX and XXXX XXXX XXXX XX/XX/XXXX, XXXX XXXX XXXXXXXX. XXXX XXXX, Navient Outsources Servicing Of XXXX XXXX Student Loans To Its Rival XXXX Your Loan Affected? XXXX XXXX and XXXX XXXX, XX/XX/XXXX, XXXX XXXX XXXXXXXX ; Navient Corporation , Navient announces strategic actions following in-depth business review, press release, XX/XX/XXXX, XXXX XXXX XXXX. XXXX Seeking Alpha, Navient Corporation ( XXXX ) XXXX XXXX Earnings Call Transcript, XX/XX/XXXX, XXXX XXXX XXXXXXXX. XXXX XXXX stated, in our private credit provision this quarter, we reserved {$35.00} XXXX due to internal policy changes we've made to meet new regulatory expectations related to school misconduct discharges on certain legacy private loans. This increase reflects our assessment of the impact to the legacy portfolios, life of loan discharges from potential borrower claims.for borrowers to exercise their rights, while holding these predatory loans over the heads of borrowers and, often, their family members.5 Although Navient recently created a purported pathway to relief, it is burdensome and confusing.6 Furthermore, the transfer, which is expected to take place over the next two years,7 will further confuse borrowers, and once in effect, XXXX  abysmal reputation for hours-long call wait times, paperwork backlogs, and innumerable abuses,8 will only make things more difficult for defrauded borrowers awaiting justice. Navient Conspired with Fraudulent For-Profit Colleges to Offer Risky and Expensive Loans to Hundreds of Thousands of Borrowers Decades-old predatory loans that were pushed onto students when Navient, as Sallie Mae, engaged in predatory loan practices with for-profit, fraudulent colleges make up a significant portion of the Navient student loan profile being transferred.9 Since the XXXX  revisions to the Higher Education Act, for-profit schools that receive federal funding must get at least 10 % of their funding from non-federal sources.10 To meet this requirement, Navient, as Sallie Mae, collaborated with for-profit schools beginning in the year XXXX to cover that gap by issuing private loans to students, in exchange for an assured, steady supply of borrowers for its government-backed loans.11 Navient itself described these loans as a baited hook for the risk-free, profitable federally-backed student loans.12 Since Navient required credit enhancements or recourse agreements from schools in order to make these private loans,13 borrowers ability to repay the loans was immaterial : lawsuits later revealed that one set of these predatory Sallie Mae private student loans had default rates ranging between 50 and 92 percent every year from XXXX to XXXX These predatory loans were designed to profit off of 5 Office of the Attorney General of New Jersey, Acting AG XXXX : XXXX XXXX  Student Loan Borrowers to Receive More than {$60.00} XXXX in Relief from Settlement with Navient Corp. in States Lawsuit Alleging Deceptive, Misleading Tactics by the Student Loan Servicer, XX/XX/XXXX, XXXX XXXX XXXX. Navient deceptively encouraged borrowers to have family members or others guarantee their loans as cosigners, which increased Navients chances of being repaid if the student defaulted. XXXX XXXX XXXX XXXX. XXXX XXXX, Navient Outsources Servicing Of XXXX XXXX Student Loans To Its Rival XXXX Your Loan Affected? XXXX XXXX and XXXX XXXX, XX/XX/XXXX, XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX The XXXX Papers, XX/XX/XXXX, XXXX XXXX XXXXXXXX. XXXX, Navient distanced itself from a controversial student-loan portfolio. Meanwhile, borrowers cant escape, XXXX XXXX, XX/XX/XXXX, XXXX XXXX XXXXXXXX? =. XXXX XXXX XXXX XXXX, XXXX XXXX XXXX, XXXX XXXX, XXXX. XXXX XXXX XXXX XXXXXXXX, The {$1.00} XXXX Student Loan Deal That Was Too Good to Be True, XXXX XXXX, XX/XX/XXXX, https : XXXX. XXXXXXXX XXXX XXXX XXXX XXXX XXXXXXXX ( XXXX. XXXX XX/XX/XXXX ), complaint. XXXX Id. XXXX XXXX XXXX XXXXXXXX, The {$1.00} XXXX Student Loan Deal That Was Too Good to Be True, XXXX XXXX, XX/XX/XXXX, XXXX XXXX XXXXXXXXXXXX XXXX XXXX XXXX XXXX XXXX Loans Designed to Fail : States Say Navient Preyed on Students, XX/XX/XXXX, students, rather than provide them with a quality educationthe schools where they were used had low graduation rates, poor job-placement records, and otherwise misled students, all of which was known to Sallie Mae.15 The Biden Administration has made a sweeping effort to cancel decades-old predatory federal loans for defrauded borrowers. Much of this progress was made under the Education Departments Borrower Defense Loan Discharge ( borrower defense ), which provides debt relief to borrowers who were misled or defrauded by their school through misrepresentations about key aspects of their program, such as admissions selectivity or career prospects.16 This is a powerful tool : the XXXX XXXX XXXX XXXX calculates that, since XX/XX/XXXX, the Department of Education ( ED ) has announced loan cancellation for more than 1.1 million borrowers, promising to wipe out more than {$18.00} XXXX of fraudulent and predatory debt from for-profit schools.17 But many students with outstanding private loans from some of these very same colleges including those held by Navient have still not received relief.18 Navient Should Cancel Fraudulent Loans Eligible for Relief Under the FTCs Holder Rule and Due to Navients Misconduct Like millions of federal student loans eligible for cancellation under borrower defense, decadesold predatory private student loans may be eligible for cancellation due to Navients misconduct and under the Federal Trade Commissions ( FTC ) Holder-In-Due-Course Rule ( Holder Rule ), a broad rule dating to XXXX, and subsequently reaffirmed and updated numerous times by the Commission, allowing borrowers, in some cases, to raise the same claims and defenses against a loan provider that they could raise against the original seller of the good or service.19 The Holder Rule is a powerful consumer protection tool, providing relief for customers when a defective or fraudulent product or service is purchased with credit arranged by the seller, including situations where the seller referred the customer to the creditor, or is affiliated with the original creditor.20 With regard to student loans, the borrower may be able to cancel existing debt if a school fraudulently induced the student to enroll and had some relationship XXXX XXXX XXXXXXXX. XXXX Id. XXXX XXXX XXXX Biden Administration Announces {$72.00} XXXX In Student Loan Forgiveness, XXXX XXXX XXXX, XX/XX/XXXX, XXXX XXXX XXXXXXXX? XXXX ; XXXX XXXX XXXX XXXX , Delivering Distress : How Student Loan Companies Cheat Borrowers Out of Their Rights, XX/XX/XXXX, XXXX, XXXX XXXX XXXXXXXX ; Federal Student Aid, Apply for Borrower Defense Loan Discharge, https : //studentaid.gov/borrower-defense/. 17 XXXX XXXX XXXX XXXX, Delivering Distress : How Student Loan Companies Cheat Borrowers Out of Their Rights, XX/XX/XXXX, XXXX, XXXX XXXX XXXXXXXX. XXXX XXXX, Navient distanced itself from a controversial student-loan portfolio. Meanwhile, borrowers cant escape, XXXX XXXX, XX/XX/XXXX, XXXX XXXX XXXX? =. XXXX Federal Trade Commission ( FTC ), Holder in Due Course Rule, 16 CFR 433, https : //www.ftc.gov/XXXX. XXXX Office of the Minnesota Attorney General, The Holder Rule, XXXX XXXX XXXX  with the lender.21 In simple terms, the Holder Rule provides an avenue to cancel student loans in many cases where Navient worked directly with fraudulent colleges to provide these loans. Navient has long known it could be liable for these predatory loans that it pushed onto students. Navient, as Sallie Mae, regularly listed the FTC Holder Rule as an operational risk for its private student loans made to students at for-profit schools. In its XXXX annual report, the company stated : If a school with which we have a business arrangement with respect to student loans closes or otherwise does not provide the borrower the promised education, the borrower could raise the same claims and defenses against us as the lender as it could against the school. As a result, our ability to collect loan amounts could be materially impaired.22 In a XX/XX/XXXX earnings call, XXXX XXXX XXXX Navients Executive Vice President and Chief Financial Officer, announced that Navient has reserved {$35.00} XXXX in anticipation of a liability to discharge certain legacy private XXXX As an independent basis, borrowers may also assert the predatory practices of Sallie Mae against Navient as a reason to cancel their loans. Sallie Mae intentionally created subprime lending programs with for-profit colleges for the purpose of facilitating ongoing access of both companies to the federal student lending program.24 Sallie Mae knew that students were not credit worthy, were unlikely to finish the programs at these for-profit schools, and were highly unlikely to repay their student loans.25 In fact, Sallie Mae insured itself against this certainty by requiring the for-profit schools to essentially guarantee the subprime private loans.26 Incredibly, even though Sallie Mae was made whole, and reaped enormous profits from its business relationships, it continues to hold borrowers and their cosigners hostage.27 This course of conduct could bar Navient from suing on these loans, and their continued collection is unfair. Navient has already cancelled the debt for some of these loans. In XXXX, 39 attorneys general reached a settlement with Navient, in which it agreed to cancel {$1.00} XXXX in private student loan debt for students defrauded by colleges like the defunct XXXX XXXX XXXX and XXXX XXXX and other major for-profit colleges including XXXX XXXX XXXX XXXX XXXX Id. XXXX XXXX XXXX Report, Sallie Mae ( SLM ), p. XXXX, XXXX XXXX XXXX XXXX XXXX Seeking Alpha, Navient Corporation ( XXXX ) XXXX XXXX Earnings Call Transcript, XX/XX/XXXX, https : XXXX. XXXX XXXX stated, in our private credit provision this quarter, we reserved {$35.00} XXXX due to internal policy changes we've made to meet new regulatory expectations related to school misconduct discharges on certain legacy private loans. This increase reflects our assessment of the impact to the legacy portfolios, life of loan discharges from potential borrower claims. XXXXXXXX XXXX XXXX XXXXXXXX, The {$1.00} XXXX Student Loan Deal That Was Too Good to Be True, XXXX XXXX, XX/XX/XXXX, XXXX XXXX XXXXXXXX. XXXX Id. XXXX. v. Navient XXXX, XXXX. XXXX ( XXXX. XXXX XX/XX/XXXX ), complaint.. XXXX Office of the Attorney General of New Jersey, XXXX XXXX XXXX XXXX New Jersey Student Loan Borrowers to Receive More than {$60.00} XXXX in Relief from Settlement with Navient Corp. in States Lawsuit Alleging Deceptive, Misleading Tactics by the Student Loan Servicer, XX/XX/XXXX, XXXX XXXX XXXX XXXX XXXX XXXX XXXX Notably, Navients misconduct was a key basis for the lawsuit, with the attorneys general unfair and deceptive student loan servicing practices and abuses in originating predatory student loans.29 But the settlement only included borrowers who were in default for at least seven consecutive months before XX/XX/XXXX, meaning that Navient provided relief to only XXXX of XXXX XXXX XXXX XXXX of borrowers who had obtained predatory loans.30 Navient Has Denied Relief to XXXX XXXX XXXX  of Borrowers Although there are XXXX XXXX XXXX of loans clearly eligible for cancellation under the FTC Holder Rule and because of the misconduct of Navients predecessor, Navient makes it intimidating and difficult for borrowers to solicit relief.31 While ED established a process for group discharge for borrowers to automatically get relief on predatory federal loans without having to individually apply, Navient opened a school misconduct discharge application that is inordinately lengthy and complex for borrowers.32 The 12-page application, asks questions seemingly designed to knock out applications, such as when the wrongdoing was discovered, and requires borrowers to include individualized documentation such as correspondence from the school, marketing materials, advertisements, course catalogs, manuals, school web messaging, and other products all from loans that may be more than two decades old.33 The application threatens borrowers with perjury for providing incomplete information.34 It asks borrowers if the court has awarded a favorable judgment against their school, and if so, to attach the court order and other relevant documents to the application.35 It requires a narrative explanation of how [ the borrowers ] life has been impacted by the fraudulent loans and an explanation of why the misleading information that the school concealed or omitted from the borrower was important to them at the time of their application.36 These conditions are unnecessary and impractical and will prevent XXXX  of borrowers from obtaining the relief they deserve. Navient should stop making borrowers apply for relief and instead automatically cancel student debt using information the company already has about whether borrowers attended schools that would entitle them to relief. Navient should start by cancelling debt for students making payments on predatory loans that were not provided relief by the XXXX settlement. XXXX Navient Multi-State Settlement, XXXX State Attorneys General Announce {$1.00} XXXX Settlement with Student Loan Servicer Navient, XX/XX/XXXX, XXXX XXXX XXXX XXXX Id. XXXXXXXX XXXX XXXX XXXXXXXX, The {$1.00} XXXX Student Loan Deal That Was Too Good to Be True, XXXX XXXX, XX/XX/XXXX, https : XXXX. XXXX XXXX XXXX XXXX. XXXX Federal Student Aid, Apply for Group Borrower Defense Loan Discharge, https : //studentaid.gov/manageloans/forgiveness-cancellation/borrower-defense/group-application ; Navient School Misconduct Discharge Application, ( Appendix A ). XXXX Navient School Misconduct Discharge Application, ( Appendix A ). XXXX Id. XXXX Id. XXXX Id.Navient Must Cancel the Loans Prior to Transfer to XXXX It is especially important that Navient cancel these loans before transferring them to XXXX. The change of servicers will complicate the chain of custody of the loans, making it even more difficult for borrowers to receive relief than Navients actions already havein XXXX, the Consumer Financial Protection Bureau ( CFPB ) found that changes in loan ownership can result in lost payments, paperwork processing issues, missing records, and late fees.37 Furthermore, XXXX has repeatedly demonstrated that it is not capable of adequately servicing student loans. After the return to repayment started in XXXX, at least XXXX XXXX borrowers were affected by servicing failures, such as a backlog of unprocessed Public Service Loan Forgiveness forms, payment miscalculations, and late bills.38 And after XXXX XXXX XXXX of federal loan borrowers were granted borrower defense relief in XX/XX/XXXX, XXXX representatives continued to insist that they would have to return to repayment.39 Given XXXX failure to follow guidance on canceling predatory federal loans, it is hard to believe that it will behave any better in canceling similar private loans Navient will transfer to them. Navient must discharge subprime legacy private loans now before they are transferred to XXXX. Conclusion and Questions Navient has, for decades, aggressively collected payments on loans that it knows are eligible for cancellation.40 These predatory loans were given to students at subprime rates, while Navient coordinated with colleges that lied to borrowers about course credits, career prospects, and programs. Under the Holder Rule and due to Navient and Sallie Maes misconduct, Navient is liable for these predatory loans and should discharge them immediately. We ask that you answer the following questions no later than XX/XX/XXXX. XXXX. Of the XXXX XXXX loans Navient is transferring to XXXX, how many were granted to attend for-profit colleges? Specifically, how many fit into one of the following three categories, established in the AG settlement:41 a. Any private education loan with an outstanding balance originated under an Opportunity or Recourse program, and disbursed after XXXX ; XXXX XXXX XXXX, New Student Loan Problems : Prepare for Lost Payments, Surprise Late Fees as Contracts Change Hands, XXXX XXXX, XX/XX/XXXX, XXXX XXXX XXXXXXXX. XXXX XXXX XXXX XXXX XXXX  The XXXX Papers, XX/XX/XXXX, XXXX XXXX XXXXXXXX. XXXX Letter from attorneys representing class members in XXXX XXXX XXXXXXXX to XXXX XXXX, Chief Executive Officer of XXXX, XX/XX/XXXX, XXXX XXXX XXXXXXXX XXXX. XXXX, Navient distanced itself from a controversial student-loan portfolio. Meanwhile, borrowers cant escape, XXXX XXXX, XX/XX/XXXX, XXXX XXXX XXXXXXXXXXXX XXXX XXXX XXXX XXXX Navient Corp., XXXX. XXXX ( XXXX. XXXX XX/XX/XXXX ), consent judgment., Appendix A, XXXX XXXX XXXXXXXX. b. Any private education loan with an outstanding balance disbursed by XXXX XXXX lenders, subsidiaries, predecessors, successors, and/or its affiliates after XXXX to a borrower attending a for-profit school, including XXXX owned or operated by, or under XXXX of the trade names : i. XXXX, XXXX XXXX XXXXXXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXXXXXX XXXX XXXX Any non-traditional private education loan with an outstanding balance disbursed by SLM XXXX lenders, subsidiaries, predecessors, successors, and/or affiliates after XXXX XXXX. What is the total value of the private loans granted to attend for-profit colleges as described in question ( XXXX ) in Navients portfolio XXXX XXXX. How many borrowers has Navient alerted to its School Misconduct Discharge Application? On what basis did it select these borrowers? XXXX. How many borrowers have applied for relief using Navients School Misconduct Discharge Application? How many borrowers have been successful and received full cancellation of their loans from Navient? How many borrower applications have been denied? XXXX. During a Navient Corporation XXXX XXXX Earnings Call on XX/XX/XXXX, Navients Executive Vice President and Chief Financial Officer stated, in our private credit provision this quarter, we reserved {$35.00} XXXX due to internal policy changes we've made to meet new regulatory expectations related to school misconduct discharges on certain legacy private loans. This increase reflects our assessment of the impact to the legacy portfolios, life of loan discharges from potential borrower claims.43 How did Navient arrive at this {$35.00} XXXX figure? XXXX. Has Navient discussed with XXXX the implications of transferring loans that are subject to cancellation under the FTC Holder Rule or other bases related to school XXXX Non-traditional means a private education loan disbursed ( XXXX ) to a borrower with a XXXX score below XXXX at origination to attend a private for-profit educational institution ; or ( XXXX ) to a borrower with a XXXX score below XXXX at origination to attend a public or not-for-profit educational institution. XXXX Seeking Alpha, Navient Corporation ( NAVI ) XXXX XXXX Earnings Call Transcript, XX/XX/XXXX, XXXX XXXX XXXXXXXX and/or Navients lending practices per question ( XXXX )? If so, what are XXXX plans to assist in the cancellation of these loans as their new servicer and what plans are underway ( if any ) to ensure adequate data sharing to ensure borrower records are not lost? XXXX. What, if any, policies or procedures has Navient taken or does it plan to take before collecting on a subprime loan to determine that loans eligibility for cancellation under the FTC Holder Rule or other bases related to school misconduct and/or Navients lending practices per question ( XXXX )? Sincerely, XXXX XXXX United States XXXX XXXX XXXX XXXX United States XXXX XXXX XXXX United States XXXX XXXX XXXX XXXX United States XXXX XXXX XXXX XXXX United States XXXX XXXX XXXX United States XXXX XXXX XXXX United States XXXX XXXX XXXX United States XXXX XXXX United States XXXX