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CEO of student loan servicing giant Navient, Jack Remondi, defended the company’s practices in a long ranging interview with the Washington Post on Monday, a few days after the Consumer Financial Protection Bureau launched a lawsuit against the nation’s largest student loan servicing company.
According to Remondi, the problems in the student loan servicing industry stem from a lack of understanding between the Department of Education and the CFPB. “There is a level of distrust between the two organizations and a lack of respect between the two organizations,” said Remondi in the interview. “What it results in is you don’t get consistency.”
Last week the CFPB lodged a lawsuit against Navient, alleging that it gave faulty information to borrowers in repayment, processed payments incorrectly, and neglected borrower complaints. The suit also charges Navient with foul play when it came to possibly lowering student loan payments for certain borrowers.
In the lawsuit, the CFPB wants Navient to reimburse or provide relief for borrowers who were affected by the alleged activities. The CFPB Director asserted that Navient “failed consumers who counted on the company to help give them a fair chance to pay back their student loans.”
According to Navient’s Remondi, the student loan servicing industry has repeatedly requested “clear and consistent” rules for loan services, even offering up recommendations but to no avail. Last year, for example, Navient suggested a pilot program in which borrowers could enroll in an income-driven repayment program via phone, something it can’t do as of today. What’s more he argues the CFPB makes it look like Navient is benefitting financially from having borrowers default and placing borrowers in forbearance, which he says is untrue.
“It’s 180 percent higher revenue if the borrower is current than if the borrower is in forbearance. It’s just false narrative, and really doesn’t show a lot of appreciation for how a servicing operation works,” said Remondi.
Remondi noted the government’s income driven repayment program is complex and that despite five years of working with the CFPB, there has been little action to improve the program. “Instead, they have sought to force standards on one servicer and apply those standards retroactively, both of which we think are very unfair,” he said.
Remondi also used the interview to defend Navient’s successes with student loan borrowers, saying it leads the industry in number and percentage of borrowers who are enrolled in income-driven repayment plans, has the lowest level of severely delinquent borrowers, and the lowest level of defaults in the industry at a rate that he says is 31 percent lower than peers.
Author: Dave Rathmanner
As the VP of Content at LendEDU, Dave regularly plans and writes content to help consumers with their personal finances. Dave’s work has been featured in the Chicago Tribune, Bloomberg, CNBC, US News, Yahoo Finance, NPR, and more.