According to a report in the USA Today, which cited a dismissal motion filed last week, Navient argued that the lawsuit launched by the consumer watchdog should be tossed out because the CFPB “invents new rules from whole cloth and claims that Navient failed to comply with them in the past.”
Earlier this year, the CFPB filed the suit contending that Navient provided borrowers with faulty information about loan payments, processed payments incorrectly, and failed to act accordingly when borrowers complained. It was also charged with steering borrowers out of lower student loan payments, causing them to pay more than necessary. The CFPB sought relief for Navient’s the 12 million affected borrowers. Half of the accounts are from a contract with the Department of Education, reported the USA Today. All told, it services $300 billion in student loans.
According to Navient’s dismissal letter, the CFPB’s lawsuit is vague and sets its basis in undefined requirements that aren’t laws and regulations in the books. Navient says that it hasn’t run afoul of laws and regulations set forth by the Department of Education under the Higher Education Act.
In the motion, Navient laid out three arguments as to why the case should be thrown out including that the CFPB didn’t establish rules defining what behaviors fell in the categories of unfair, deceptive, or abusive practices for student loan servicers. The CFPB’s operating structure with director Richard Cordray was found unconstitutional in 2016 by a federal appeals court which means it doesn’t have the authority to launch the lawsuit.
Ever since the CFPB launched a lawsuit against Navient, the former Sallie Mae unit has been taking an aggressive stance in fighting back. Jack Remondi, Navient’s Chief Executive defended the company’s practices in a long ranging interview with the Washington Post shortly after it was hit with the lawsuit. He argued that the problems in the student loan servicing industry stems from a lack of understanding between the Department of Education and the CFPB.
What’s more, Remondi said that the loan servicing industry has requested “clear and consistent” rules for loan services multiple times, 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 that can’t be done today. Navient may have support in its fight since the majorly Republican House and Senate have bristled at the structure of the CFPB with some calling for it to be dismantled.
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.