The CFPB is currently suing Navient, the country's largest student loan servicer for creating obstacles to repayment by providing bad information to borrowers.
Loans

Bad Loan Officers Sued for Misleading Borrowers

Lakisha Johnson, a single mother living in a shelter after losing her West Philadelphia home. Johnson planned to pull the family out of this current financial struggle with her tax refund from the IRS. Instead, the IRS kept the $8220 refund as a way to recoup some of her student loan debt. The debt became unmanageable after she had been convinced by a loan officer to put her loan in forbearance – where it still collected interest – instead of using an income-based repayment plan.

Johnson is one of 8 million borrowers in the US defaulting on a combined $137.4 billion in government-held or backed student loans. 11% of the $1.325 trillion in federal student loans outstanding are severely delinquent or in default right now, and the Department of Education is taking every step possible to collect on those funds.

These collection efforts are hurting people already struggling. Seth Frotman, a senior member of the Consumer Financial Protection Bureau in Washington DC even noted, “We treat struggling student-loan borrowers the same as deadbeat parents and tax cheats.” He continued “Even gambling addicts have more protections.”

Johnson’s situation involved Navient, the largest student-loan servicers in the country. The CFPB is currently suing the company claiming it added $2 billion in student loan debt by failing to provide income-based repayment plans to borrowers that were distressed.

Student loan debt consolidation is an option, though. Many of today’s student loan borrowers don’t know about their options to refinance their debt into more affordable payments.

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