Navient, the “largest collector of student loan payments in the nation,” is facing lawsuits for making errors that have resulted in harm to borrowers and misleading borrowers about their options for their student loans. I came across a New York Times article on the subject and read it expecting to come away upset with yet another financial institution failing the very customers they were expected to serve. But, after reading the article, I didn’t feel angry with Navient but rather sympathetic toward them. Granted, I know nothing of the cases mentioned beyond what is in the article and am by no means an expert in laws regarding banking, lending, etc. I do think I have an above average knowledge of student loans and the income based repayment options now available so I’m no dummy on the topic either. So please take my reflection on the situation with a grain of salt and let me know if you think I’m wrong or missing some important information.
Why am I sympathetic to Navient?
- The NYT article relies almost exclusively on anecdotes. That’s not saying the stories of customers getting harmed aren’t true; it’s just that in an article meant to show me, the reader, why Navient is getting sued, no information was presented as to any systemic abuses that would justify a lawsuit.
- Navient as a loan servicer has little to do with income based repayment plans. These are applied for directly through the Department of Education and the loan servicer is notified afterwards. Navient can’t “deny” income based repayment options to a borrower. They’re not even involved. Yes, the process of understanding and getting income based repayment for student loans is complicated but that’s not Navient’s fault. Blame the Department of Education, or thank them for giving any sort of leeway at all.
- Does anyone really think it’s the loan servicer’s job to give financial planning advice? If you’ve tried to look into it, you know income based repayment is complicated. I would by no means expect Navient to be the one to advise me on this and am surprised anybody would. Hopefully they would point an inquiring borrower to the Federal Student Aid website that provides more information but beyond that, I’m not even sure what they could do.
- The article faults Navient with not applying payments correctly. Word of advice: if you mail a check for $10,000 to pay off your student loans, double check a few days later to make sure it’s credited against those loans. Again, I would think that’s common sense but I guess not. Maybe Navient is “losing” checks but there’s no information here to suggest that and (as far as I can tell) there’s little or no incentive for them to do so.
The real topic to discuss is student loans. There are options for refinancing, consolidating, getting a forbearance, various income based repayment options, several “regular” payment options, not to mention paying them down faster. What is best for you is not going to be what is best for everyone. If in doubt, a borrower should get advice from an expert whose job it is to give advice. A call center representative from a student loan servicer is not a financial advisor, nor should we expect them to be. I do hope Navient starts offering more information to help borrowers make good decisions but let’s not pretend that they should provide individualized financial planning advice that is impacted by things well beyond just your student loans.
If I’m off-base on something here, please let me know. Maybe I’m completely misunderstanding what is going on here and will be the first one to admit it if I am.