Navient and other federal student loans servicers aren’t set up for success

Despite its faults, Navient isn’t wrong in protesting that the scholar loan system as an entire is broken. As Travis Hornsby explained when news of Navient’s lawsuit was initially reported, these sorts of stories really shouldn’t be only too surprising.

The people working for federal loan servicers are overworked and sometimes not given proper training. they’ll be too busy to offer personalized advice to each borrower, in order that they “read from the script.”

And when the federal first introduced the PSLF program in 2007, the Department of Education didn’t provides a guidebook about the way to handle it. Many servicers simply didn’t understand the principles . within the suit being brought against Navient by the nine teachers, Jessica Saint-Paul, one among the plaintiffs, explains that she asked a Navient customer service representative about PSLF. She was told that she needed to form 120 consecutive payments so as to qualify.

Obviously, this is often completely wrong because PSLF payments don’t got to be consecutive. And you’ll imagine how being told something like that would discourage you from even pursuing PSLF within the first place.

So assuming this is often true, was Navient wrong during this situation? Absolutely. But was Navient purposely giving this sort of wrong advice to public servants on a daily basis?

Or did Navient just fail to properly educate a customer service representative who ended up later giving a borrower bad advice?

In reality, the federal requested a coffee cost contract to service many borrowers. That low cost translated into low buy the customer service reps, which translated into poor customer service and frequent incompetence.

The lawsuit brought by the CFPB does cover both Private and Federal student loans so that the lawsuits will help everybody regardless of the type of loans. The essential accusation from the Consumer Financial Protection Bureau’s lawsuit is establishing barriers to repayment by giving students misleading information, incorrectly processing the payments and failing to react when the students disagreed.

The Illinois lawsuit accuses Navient of misleading student loan collection practices. Navient gave the borrowers false information about their options so they cannot get out of the default. There is the Federal Student Loan Rehabilitation Program which was made to help students who fell behind on payments to help them get back on track and carry on repaying their loans without additional interests. There are certain cases where a student cannot repay her loan. The reason might be injury, unemployment or other financial difficulties. Navient always tried to make sure that students never get out of the default by giving them deceptive information. The Federal Student Loan Rehabilitation Program was already very confusing, and Navient took advantage of it and made it harder for its borrowers.

What I am about to tell you might sound a bit crazy but in case the Navient lawsuits are accepted, and you successfully get your loans discharged or forgiven you will have one last problem to solve which is the tax. When you receive loan forgiveness, the IRS considers it a taxable income. For example, if you owed 20,000 US dollars to Navient which is now forgiven, you might owe IRS about 4 to 6 thousand dollars. The worst thing is that the IRS will demand the whole amount right away without giving you a chance of paying it monthly. But that should not make you devastated because there is and will be a lot of borrowers like you who will owe money to the IRS and it can also be resolved just like Navient loan forgiveness depending on the situation.

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