2023-08-24 04:28:52
The Department of Justice of Puerto Rico (DJ) sued, for alleged fraud and deceptive practices, the main provider of student loans in the United States, the company Navient Solutions, formerly known as Sallie Mae.
The lawsuit demands the cancellation of millions of dollars owed by the students, among other remedies.
According to Justice Secretary Domingo Emanuelli Hernández, at least 20,000 island-resident students obtained services from Navient, who may have been affected by what he called improper actions by the company. He indicated that the accumulated debts and interest could reach $12 million.
In the lawsuit, the DJ argues that the federal and private loan servicing entity has engaged in unfair, deceptive, and abusive practices under state and federal laws, “to the detriment of students who took out loans to be able to pursue university studies.” In addition, he indicates that his “ambiguous and incorrect processes and errors in the provision of services” have had negative repercussions on the finances, credit, and lives of student debtors.
Among the remedies requested by the DJ are: debt relief, and even the cancellation of loans, “whose balances increased due to errors in the provision of services and the inappropriate granting of loans by Navient”; credit repair for students whose credit was affected by Navient; and money restitution for students who overpaid due to Navient’s actions and civil penalties.
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Among the irregular practices of Navient raised in the lawsuit is the origination of high-risk loans, known as subprime, knowing that the students did not have the ability to repay, “and then incurring in aggressive collection efforts, ruining the company in the process.” student life in the process”.
Another allegation is that the company induced students who had difficulty paying their loans to make deferred payment agreements or forbearance, instead of making payment plans based on their income, which is known as income-driven repayment program (IDR), which could be more favorable in most cases. Under the so-called forbearance, payments were deferred for a while, but during that period interest continued to accumulate and students ended up paying significantly higher monthly payments than those originally agreed.
Similarly, it is alleged that Navient, which administered federal loans through 2021, deliberately failed to inform borrowers of the dates on which they had to renew or recertify their payment plans, thereby exposing them to irreversible consequences, such as increases substantial monthly payments and the loss of federal subsidies for interest payments, among others. “As a consequence of this bad practice, 60% of student debtors did not comply on time with recertifications.”
The lawsuit, filed by the DJ through his Secretary of Monopolistic Affairs, on behalf of the Government of Puerto Rico, last Friday, August 18, in the federal Court for the District of Puerto Rico, maintains that Navient deceived the students on the terms for the relief of the co-debtors of the loans. “In addition, Navient had highly ambiguous and opaque processes that resulted in payment application errors, particularly when a student had multiple loans, resulting in improper late fees, interest increases, and negative credit reports.”
“Through this fraudulent conduct, Navient has abused many of the island’s students who have seen student loans as a mechanism to obtain an academic degree in the hope of financial freedom. However, through deception, they have placed an onerous and unfair burden on them,” stressed the Secretary of Justice, who maintained that a “significant number of Puerto Rican students” could benefit from the lawsuit.
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