Nearly 25% of those who've borrowed money for school deal with Navient, the nation's largest servicer of both private and federal loans, and now two lawsuits against the company claim those 12 million or so borrowers have been cheated, the New York Times reports. Damages sought by the suits—filed separately by the Consumer Financial Protection Bureau and the state attorneys general of Illinois and Washington, who also sued Sallie Mae, per CNNMoney—could amount to billions of dollars and affect every customer, says Illinois AG Lisa Madigan. Allegations against the company, which doesn't actually make the loans but collects the payments on them for various banks and other lenders, include mismanaged loan payments, a lack of full transparency in loan documents, and other errors and mishandlings that may have illegally increased loan repayments.
The CFPB says the company, which used to be part of Sallie Mae until 2014, "chose to shortcut and deceive consumers" to save money, including by purposely driving consumers away from income-based repayment plans that would be better for them but not as profitable for Navient. Another group the CFPB says Navient took advantage of: injured military veterans, whose credit reports were said to be damaged by misreported defaults. The bureau says tens of thousands of consumers have filed complaints against Navient since the CFPB began in 2011, per Fox News. Navient is crying partisan foul, claiming the move is a "midnight action filed on the eve of a new administration." Republicans have long gone after the CFPB, as well as the bank-regulating Dodd-Frank Act that created it. Navient defends itself in a statement on StreetInsider.com. (How unpaid student debt affects seniors.)