A New York resident has filed the latest proposed class action lawsuit against Navient, with the case alleging the company, rather than help borrowers navigate the complex student loan repayment landscape, instead ignored available income-driven repayment (IDR) options for federal student loans to push borrowers into forbearance. According to the 54-page complaint, Navient applied this “forced forbearance” approach as a way to cut down on the number of customer service representatives it hired, as well as to lower average call times.
According to the lawsuit, eligible borrowers of federal student loans can apply for income-driven repayment plans with lower monthly payments that may possibly be forgiven after 20 to 25 years of repayment. These programs offered by the government are managed by hired contractors, such as Navient, who interact directly with borrowers andshouldhelp individuals apply for and navigate IDR programs. Transparently, IDR programs are more involved than other student loan repayment plans and require a proactive approach from loan servicers in guiding borrowers, the lawsuit adds.
The case notes that while Navient publicly poses itself as helpful to borrowers as far as choosing appropriate repayment options, the company’s customer service model represents entirely different goals, i.e. saving money by cutting down on personnel costs at the expense of borrowers. All told, the lawsuit argues Navient merely offered a “temporary solution” that only aggravated the issue of borrowers being unable to meet their monthly loan obligations while interest accrues during forbearance. From the lawsuit:
“In fact, Navient directly incentivized its customer sales representatives to spend as little time as possible on the phone with borrowers by rewarding employees with bonuses for short call times. Motivated to shorten their calls, Navient customer sales representatives often skipped the lengthy discussions about IDR. With less customer service personnel required, Navient saved on expenses.”