The crippling burden of student loans on our nation’s youth is no secret, in fact, it’s a full out financial crisis. But it seems the federal government is finally stepping in on the students’ behalf.
On Wednesday, the Washington State Attorney General sued Navient (formerly part of Sallie Mae) for allegedly swindling borrowers out of their repayment options, according to CNN Money.
“At every stage of repayment, Navient chose to shortcut and deceive consumers to save on operating costs,” said Richard Cordray, the director of the Consumer Financial Protection Bureau.
The suit alleges that Navient made it harder for loan borrowers to enroll in income based repayment plans and advocated for students to stop payments through forbearance, that ultimately increases the balance of the loan through interest payments.
The issues raised by the government not only applies to dispersed loans, but it also claims that the way loans originated was unlawful.
According to the suit, Sallie Mae put student borrowers into “expensive subprime loans that it knew were going to fail.”
Navient responded to the lawsuit saying “the timing of this lawsuit — midnight action filed on the eve of a new administration — reflects their political motivations.”
Navient currently handles over 12 million student loan accounts.
SOURCE: CNN MONEY
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