The American Federation of Teachers filed a lawsuit Wednesday against Navient, one of the country’s largest student loan servicing companies, alleging that it failed to guide eligible borrowers through a critical student loan forgiveness program.
The lawsuit focuses on the Public Service Loan Forgiveness program. The program, signed into law in 2007, allows borrowers who work 10 years in an eligible public service job and make 120 on-time loan payments toward their balances to have the rest of their loan balances forgiven.
The program is complex and has been plagued with problems as the first borrowers have become eligible starting last year. A Department of Education report issued last week found only 96 applications were approved out of 28,000, with most being denied for having the wrong loan type or missing or incomplete information.
The AFT lawsuit alleges that Navient steered borrowers into repayment programs or types of forbearance that do not qualify for the loan forgiveness program.
“Brazen, inexcusable servicing breakdowns left (teachers) still under a mound of debt, unable to put anything aside for their children or their family, but now with no end in sight,” said Seth Frotman, the former Consumer Financial Protection Bureau’s student loan ombudsman. He left the bureau in August out of frustration about now President Trump-controlled CFPB’s handling of student loan issues.
“For too long, the student loan industry has not been held to account for its failures,” Frotman said. “Today is about getting them much needed justice.”
Navient Corp. is also being sued by several states and the CFPB for failing to service student loans correctly. The Wilmington, Delaware-based company denies all the allegations in those lawsuits. The company also declined to comment on the AFT’s lawsuit.
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