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Navient Stock Tumbles on Lawsuit News

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Shares of Navient Corp. (NAVI), a major student loan servicing company in the United States, plunged on Monday as markets digest news of a new lawsuit. The stock was down 3.73% mid-afternoon and down to 12.13 from 14.97 five days ago.

The Pennsylvania Attorney General's office filed a lawsuit against Navient, formerly part of Sallie Mae, last Thursday. The suit alleges that the student loan servicing company was "peddling risky and expensive subprime loans that they knew or should have known were likely to default."

Navient said in a statement that the "allegations are completely unfounded and the case was filed without any review of Pennsylvania residents' customer accounts."

Pennsylvania Attorney General Josh Shapiro offered more details about the suit on Twitter, tweeting: "Our lawsuit accuses Navient of predatory and misleading practices, including $4 billion in abusive interest charges."

The Attorney General's office has accused Navient of making predatory loans to students attending schools with graduation rates of less than 50%. The suit also alleges that the company used its subprime loans to become a "preferred lender" at schools, boosting its volume of private and federal loans.

The case affects a wide range of loans and students, from the student earning a history degree at a state university to a student earning an online law degree.

The lawsuit accuses Navient of steering students into long-term forbearances that accrued interest and added to the principal balances of loans. The Attorney General's office says Navient should have been helping borrowers apply for income-driven repayment plans instead.

The Attorney General's office is seeking:

  • Civil penalties.

  • Full restitution to all borrowers affected by the company's unlawful practices.

  • Disgorgement of the company's unlawfully gained profits.

  • Reformation or rescission of contracts or loan agreements between Navient and consumers in Pennsylvania.

The suit also aims to have Navient stop collecting on illegal loans and remove negative credit information it has provided to consumer reporting agencies.

So far in 2017, Navient has received a total of 8,209 complaints, according to The Student Loan Report - more than any other student loan servicer.

Experts say that existing borrowers won't likely have to take any immediate action regarding the lawsuit. Those who do not have a problem with the lender have no reason to switch to another.

Borrowers are encouraged to contact the Consumer Financial Protection Bureau if they have issues with their student loan servicing company.

News of the suit comes when new statistics show that national student debt has climbed to $1.4 trillion this year. The average default rate is at 10.7%.


This article was written by Adam Monson for on .

This article published in collaboration with Scutify, the best app for traders and investors. Download the Scutify iOS App, the Scutify Android App or visit Scutify.com.

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