[UPDATE - A revised version of this lawsuit was filed in Mississippi on November 28, 2017. The new case names only Navient Solutions, LLC as the defendant. Our Newswire writeup of the new complaint can be read here.]
[UPDATE – On June 10, 2017, the claims against the individual attorneys and law firm defendants in this case were dismissed with prejudice. The case against Navient Solutions, LLC, however, has not been dismissed. A PDF document of the order granting the dismissals with prejudice can be viewed at the bottom of this page, above the original complaint.]
A consumer from Mississippi on May 5 filed a 61-page doozy of a proposed class action lawsuit against Navient and several legal entities who engage in the collection of student loan debts over the parties’ alleged use of, to put it lightly, “unlawful, fraudulent, or deceptive loan-inducement activities.”
Another lawsuit? What are the allegations this time?
This class action against Navient is particularly newsworthy because, the company’s allegedly deceptive and unethical collection practices notwithstanding, the case revolves around allegations that the law firm and individual attorney defendants improperly solicited legal services to borrowers, i.e. individuals who may be experiencing financial hardship, purporting “private student loan debt resolution.”
I’m guessing this lawsuit is a little different than some others?
What makes this lawsuit stand out from similar cases are claims that Navient’s co-defendants—Florida attorneys Kevin Mason and Chantel Grant and their law firms—committed legal malpractice, as well as “other gross acts of negligence,” by inducing some student loan borrowers with “private student loan debt resolution” services.
The plaintiff alleges the above defendants specifically targeted borrowers “struggling with the repayment of their Navient-serviced loans” with their faux-resolution services, a con they allegedly perpetrated with Navient’s blessing. The problem (emphasis ours)?
“However, through fraud, or gross negligence on the part of the attorney and law firm defendants, [the named plaintiff and proposed class members] agreed to pay, unbeknownst to them, the attorney and law firm defendants 50 percent of their total student-loan-balance, in monthly payments, for 10 years.”
The lawsuit alleges money paid to the attorney and law firm defendants, again unbeknownst to proposed class members, was not, in any way, applied to their student loan balances, and was instead kept by the defendants.
It’s important to note, here, that the above allegations are merely the tip of the tip of this lawsuit’s Titanic-sized allegations iceberg. The claims detailed above pertain to one of three classes—the “Private Student Loan Inducement and Origination Class”; the “Navient-Serviced Private Student Loan Class”; and the “Attorney and Law Firm Class”—proposed to be covered by the litigation.
What are the other allegations?
The lawsuit alleges that from 2005 through roughly 2015, Navient (and its predecessor, Sallie Mae) lied to borrowers about “material information” concerning the repayment of their loans. According to the case, these ostensible misrepresentations included:
Critical details about forbearances, interest rates, and the “total estimated costs” of borrowers’ loans, including all interest and financing charges;
“True employment statistics,” specifically average salary data, of the graduating classes of assorted educational institutions; and
The fact that many private student loans are eligible for discharge under the United States Bankruptcy Code and, as such, are subject to statutes of limitations under state laws for individuals with private student loan promissory notes
In addition to alleging Navient effectively lied to him and proposed class members about almost every aspect of their student loans and related servicing, the plaintiff, who was 18 at the time his Navient loan obligations began, claims he was also illegally induced by the defendants to the point where, years later, he owes a student loan balance “well into six-figures, that cannot possibly be repaid.”
But that’s not the end of it.
Really? There’s more?
The suit also alleges Navient failed perform its “core duties in the servicing of its portfolio of private student loans” in violation of federal consumer financial laws. This proposed class, the lawsuit says, made the mistake of placing their trust with a borrower like Navient, who ultimately steered them in a harmful direction, according to the suit (emphasis ours).
“Most federal student borrowers have a right under federal law to set their monthly student loan payment as a share of their income, an arrangement that can offer borrowers extended payment relief and other significant benefits. Navient systematically deterred numerous borrowers from obtaining access to some or all of the benefits and protections associated with these plans.”
While it assured proposed class members that it would find a repayment option that best fit their circumstances, Navient at the same time allegedly drove some borrowers, like the plaintiff, into long-term financial hardship, the suit claims.
What’s this I’ve been reading about long-term vs. short-term repayment issues with Navient?
As with previous litigation against Navient, the lawsuit argues that the company made policy and practice of deterring borrowers from cashing in on some of the benefits and protections associated with their student loan plans. To this point, the lawsuit claims Navient, while assuring borrowers it would help them find repayment options that fit their circumstances, steered some individuals, namely those mired in long-term financial hardship—like the plaintiff—into “costly payment relief” plans supposedly designed to aid those experiencing short-term financial strive.
The case gives an example of how Navient’s purported conduct allegedly prevents some of its most financially vulnerable borrowers from getting out of the mud (emphasis ours):
“For borrowers who did enroll in long-term repayment plans, Navient failed to disclose the annual deadline to renew those plans, misrepresented the consequences of a non-renewal, and obscured its renew notice to borrowers who were due for renewal,” the lawsuit reads. “As a result, the affordable payment amount expired for hundreds of thousands of borrowers, resulting in an immediate increase in their monthly payment and other financial harm.”
That was exhausting. Now, how can I join this class action lawsuit?
Right now, the only course of action for individuals who would like part in this – or any other proposed class action against Navient – is to sit tight. There’s really nothing to do until when, and if, any of these cases settle. (Why’s that, you ask? Head over to our “How Do I Join a Class Action” guide to find out more.)
In an ideal world, class action litigation potentially affecting hundreds of thousands of student loan borrowers would move through the legal system quickly and efficiently. Unfortunately, this is not our reality.
That being said, ClassAction.org will continue to bring the latest updates about class actions filed against Navient. On our side, it can be frustrating for those of us writing about these kinds of lawsuits because, while we know our readers need and deserve updates, sometimes there’s simply nothing new to report on, other than the filing of new cases.
In case you missed it, check out some of our most recent coverage of legal action against Navient: