Nine plaintiffs have put their names on a proposed class action lawsuit in which they allege public service professionals—teachers, nurses, and police officers, among many others—have been turned away from the federal government’s Public Service Loan Forgiveness (PSLF) program as a direct result of student loan servicer Navient’s “fraudulent misconduct.”
Public Service Loan Forgiveness
The lawsuit kicks off by expanding upon how hard the costs of higher education have hit public servants, many of whom, the suit says, struggle with student loan repayment due to stagnant wages and rising living costs. Seemingly aware of the crisis among this particular group of workers, the federal government created the Public Service Loan Forgiveness (PSLF) program, under which “a public service worker’s federal student debt is forgiven entirely after 120 qualifying payments,” the complaint states.
According to the case, repayment plans offered by student loan servicers such as Navient (not to mention the companies themselves) should work in concert with the government’s PSLF. Navient, however, is allegedly at the front of a pack of for-profit government-contracted companies that the lawsuit claims have steered student loan borrowers wrong.
“Navient has not been living up to its obligation to help vulnerable borrowers get on the best possible repayment plan and qualify for PSLF,” the suit claims. “Instead, Navient has harmed and continues to harm millions of hard-working public servants by routinely providing false information to these borrowers preventing them from qualifying for the PSLF program.”
Profits Before Service
Clocking in at 117 pages, the lawsuit alleges Navient, in pursuit of increasing profits, has repeatedly lied to some of the nation’s most vulnerable student loan borrowers who turned to the federal contractor for assistance. From the complaint:
“Solely in the pursuit of increasing its own profits, and at the direct expense of our nation’s public servants, Navient has:
- Deceived borrowers by informing them PSLF was not available to them or that Navient does not offer PSLF, without specifying that the Department of Education offers PSLF and another servicer, FedLoan Servicing, administers it;
- Misrepresented to borrowers they were ‘on track’ for PSLF when in fact their loans would not qualify for PSLF without consolidation;
- Misled borrowers by stating they were ‘on track’ for PSLF when in fact their repayment plan did not qualify for PSLF; and
- Advised borrowers not to submit paperwork that would verify their employment and other qualifying factors for PSLF, resulting in their loans being transferred to another servicer.”
The lawsuit cites data released by the Department of Education that found 98 percent of student loan borrowers who filed PSLF applications since 2017 have been rejected. All told, fewer than 100 individuals have had their loans forgiven through the program, according to the suit.
Navient Employees Allegedly Incentivized to Work Against Borrowers
According to the lawsuit, one method Navient utilizes to boost its profits is by cutting down on costs associated with interacting with customers directly. The case explains that Navient allegedly incentivizes its employees to keep calls with student loan borrowers brief—with a target time of as few as seven minutes—effectively rewarding phone operators for “rushing borrowers” off the line. A result of this conduct, the suit alleges, is that borrowers do not receive complete and accurate information concerning what repayment options may be best for their circumstances.
Moreover, Navient allegedly directs its customer-facing employees to push student loan borrowers into forbearance rather than income-driven repayment plans, conduct the lawsuit describes as “devastating” to one’s financial outlook. The suit, citing a February 2017 Buzzfeed report, goes so far as to allege some Navient employees “even hung up on borrowers who sought help filling out income-driven repayment forms.”
The lynchpin of Navient’s alleged scheme, however, appears to be a simple directive that borrowers should not submit any PSLF employment certification forms until they’ve made the required 120 payments, according to the suit.
“That is extraordinarily harmful to the borrower because the submission of the Employment Certification Form allows a borrower to determine whether the borrower’s loans, payment plans, and employment qualify for PSLF,” the suit says, pointing out that the Department of Education even suggests that borrowers send in the forms as early as possible.
At the end of the day, the suit says, borrowers who've had to deal with Navient have spent “millions if not billions” on student loan payments that may very well have been reduced or eliminated through PSLF.
“Instead of helping relieve the financial burden of student loans by supporting PSLF,” the lawsuit says, “Navient has locked these public servants in a prison of permanent financial distress.”
The entire 117-page complaint can be read below.