Lawsuit Alleges Sallie Mae and Navient Unlawfully Charging Late Fees
Last Updated on November 13, 2019
Important Information
Attorneys working with ClassAction.org are no longer reviewing claims involving students who took out loans with Navient/Sallie Mae. That doesn't mean the litigation involving the student loan servicer is over. Scroll down for more information.
Case Update
- May 29, 2019 – What’s Going On with Lawsuits Against Navient? Not a Whole Lot, Actually
- There hasn’t been much to report on lately when it comes to class action lawsuits filed against Navient. Nevertheless, ClassAction.org receives emails and comments regularly asking “what’s going on with the Navient lawsuits?” If you’re looking for answers, or could use a refresher on where we’re at and how we got here, head over to our blog.
At A Glance
- What's Going On?
- Navient Inc. is facing a handful of class action lawsuits alleging, among other things, that the student loan servicer intentionally placed roadblocks preventing borrowers from successfully paying their student loans back, allowed law firms to solicit faux debt resolution services to struggling borrowers, and misled borrowers into thinking their student loans were paid in full.
- How Do I Join a Class Action Against Navient?
- In general, you don’t need anything to join a class action lawsuit. If a case involving Navient settles and you are eligible to claim part of the settlement fund, you will be contacted via e-mail or regular mail. For more information about joining class actions, check out this article.
- How Will They Know to Contact Me?
- If you’re a customer of Navient, they’ve most likely got a file on you, with your address, phone number, etc. And, as part of the lawsuit process, they probably had to turn these files over. From these, the administrator of the settlement can identify you as a “class member” – basically, someone who can participate in the settlement. You can read a full explanation of how they get your information here.
- Anything Else?
- In January 2017, the Consumer Financial Protection Bureau sued Navient over its loan collection practices. On the agency’s website, you can voice your complaints about student loans with Navient or any other servicer. And, as always, if you wish to speak with an attorney in regard to your rights as a Navient borrower, we urge you to contact a lawyer in your area.
Blog Updates - Read the Latest on the Navient Litigation
October 5, 2017 – Pennsylvania Attorney General Josh Shapiro filed a lawsuit against Navient in federal court alleging the company’s “predatory conduct” has harmed student loan borrowers nationwide. Attorney General Shapiro’s lawsuit joins the ranks of similar cases filed earlier in 2017 by the Consumer Financial Protection Bureau and attorneys general in Washington and Illinois. Shapiro’s lawsuit is different than the others, Bloomberg writes, because, among other aspects, his office, which has oversight over the companies that handle roughly half of the nation’s student loans, could have “unique access” to any evidence of—and employees possibly involved in—potential illegal activity. The complaint for this lawsuit can be read here.
October 3, 2017 – A proposed class action lawsuit was filed in New York against Navient that alleges the company, after the passing of a federal law that could reportedly harm its bottom line, intentionally did not disclose to student loan borrowers who sought advice from the company that government-offered repayment options may have better fit their financial circumstances. Our write up of that lawsuit and the official complaint can be read here.
August 18, 2017 – Navient was hit with a proposed class action out of New York alleging the company favored pushing student loan borrowers into “forced forbearance” rather than fulfill its obligation to help borrowers navigate income-driven repayment plans. The lawsuit claims Navient’s goal behind steering borrowers into forbearance is to cut down on customer service personnel costs and reduce average call times. More information on this case, as well as the official complaint, can be found here.
May 5, 2017 – A new lawsuit is filed claiming Navient and two Florida attorneys and their law firms preyed specifically on student loan borrowers struggling to repay their loans by offering, with Navient’s permission, “private student loan debt resolution” that ultimately led to the parties pocketing borrowers’ money. The case also took issue with Navient’s alleged failure to perform its core duties in the servicing of loans as it steered financially vulnerable borrowers away from protections and benefits associated with their repayment plans. More on this class action can be found here.
April 4, 2017 – A proposed class action is filed against Navient and two debt collection agencies alleging they illegally misrepresented the status of many borrowers’ student loans and unlawfully threatened some individuals with wage garnishment. Read more about this lawsuit here.
January 20, 2017 - Navient, Inc. is hit with the first class action following the lawsuit lodged by the Consumer Financial Protection Bureau. You can read more about the new lawsuit here.
January 19, 2017 – The Consumer Financial Protection Bureau hits Navient with a lawsuit alleging the company illegally cheated borrowers and failed to perform its "core duties in the servicing of student loans." You can read more about the case here.
The information below pertains to an investigation launched several years back. This was prior to the recent class action lawsuits described above. The information below is for reference only. Any update to the current litigation will be added above this content. For a list of active investigations, please see our lawsuit list page.
A class action lawsuit has been filed in California alleging that Sallie Mae, which is now known as Navient, is charging excessively high late fees on private student loans.
What Is the Lawsuit Saying?
Sallie Mae Is Breaking State Laws, Overcharging Customers
According to the lawsuit, Sallie Mae (now Navient) charges a late fee of 5% for each missed payment on private student loans. The lawsuit alleges that these late fees are unlawful because they do not bear a relationship to the actual costs incurred by Sallie Mae or Navient in processing the missed payments. Under California’s consumer protection laws, the late fee must be based on Sallie Mae’s actual cost associated with processing a late payment.
The Late Fee Is “Exorbitant”
The class action also alleges that the 5% rate is exorbitant because it is equivalent to an annual interest rate of 120 percent. In addition to the late fee, Sallie Mae continues to charge regular interest on the missed payment amount, causing the borrower to pay Sallie Mae twice for being late on a single loan payment.
Which Loans Are Affected?
Sallie Mae’s private education loans are loans made by Sallie Mae to students to pay for the cost of education. These private student loans were marketed by Sallie Mae as “Signature Loans,” “Signature Student Loans” and “Signature Select Loans” and are not Federal Family Education Loans, which are insured by the federal government. In some instances, the private education loan may have been originally provided by a bank, lending agency, or financial services firm, but is now serviced by Navient.
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