Do you have student loans? If so, there's a decent chance that Navient, the largest student loan servicing company in the country, is servicing at least one of them. (Navient, formerly part of Sallie Mae, services federal student loans as well as private ones.)
If yours is among the 12 million loans this company is servicing, there's a decent chance it has cheated you, according to Illinois, Washington, and the U.S. Consumer Financial Protection Bureau (CFPB), all of which are suing the student loan giant. What did Navient do wrong?
Lawsuits point to borrowers who paid off their loans, only to have those payments get "lost" by the company. They saw their balances grow to huge amounts on loans they thought they were done with. In other cases, borrowers who would have qualified for lower income-based payments under federal law were instead steered to something called "forbearance," which allowed them to skip some payments but saw their interest mount up, unnecessarily increasing the total they supposedly owed. The CFPB claims Navient may have collected $4 billion in interest it shouldn't have from putting people into forbearance, often multiple times.
And that's just the beginning of what the bureau says Navient did wrong. You can read the full filing here. The company has denied the allegations, and Navient's CEO told the Washington Post that absurdly complex rules are to blame for the problems with student loans and that it has repeatedly tried to work with the federal government to simplify the process.
Whichever side you believe, if you have student loans of any kind, here's what you need to do now:
1. Determine whether any of your loans are serviced by Navient.
To do this, you will need to find out who your loan servicers are, and you can. This post by NerdWallet gives detailed instructions for finding out who's servicing your federal student loans. If Navient is servicing your loan, you should keep track of this lawsuit as it progresses through the courts, since the government wants the company to pay money back to borrowers.
2. Make sure you have up to date information on your loans.
You probably took out your student debt when you were young and perhaps not meticulous at keeping track of financial information. If, like many people, you're not 100 percent sure what you owe to whom, now is a good time to get the facts straight. You can't get on top of repaying your student loans if you don't know exactly what they are.
For federal loans, following the instructions for finding out who's servicing your loans will also tell you what loans you have and for how much. Private loans can be harder to track down, but one good tactic is to get a free credit report from annualcreditreport.com from each of the three credit bureaus that sponsor it (Experian, Equifax, and TransUnion). Private lenders usually report these loans to credit bureaus, so you're likely to find them this way.
3. Look into income-driven repayment options.
If you're having trouble making your loan payments and you have a federal loan, your income or family size might entitle you to make lower payments or even no payments at all. This website at the Department of Education gives more detailed information that should help you figure out if you qualify, and if it makes sense for you.
One thing to note: If you do use an income-driven plan, you will have to requalify for it every year. Don't depend on your loan servicer to remind you when that is. Find out the deadline and mark it on your calendar.
4. Make sure any extra payments are allocated correctly.
Many people with student loans make extra payments to make that debt go away more quickly. Unfortunately, your loan servicer may not allocate that money in the way you wish, unless you give it very specific instructions. (This also may be illegal, but that's another story.)
For instance, instead of paying down your principle, the servicer may simply not make automatic deductions for your next few payments, leaving your loan principle unchanged. If it's servicing multiple loans for you, it may decide to apply the extra money to a loan of its choosing. So if you want to pay down principle on the loan with the highest interest, for example, make sure you give your loan servicer specific instructions on what to do with any extra payment any time you make one. Ideally, these should be written instructions, so you have a record of them.
4. If your servicer has done anything wrong, complain!
The CFPB has an online portal set up for anyone who wants to complain about a lender, student loans included. You can use it to complain about your servicer (Navient or other) if you've been hit with charges you didn't deserve, your payments haven't been processed properly, or extra payments haven't been properly allocated. Speak up! It can't hurt and it just might help.