Mississippi sues Navient, claiming student loan abuses

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The company denies the charges

Mississippi Attorney General Jim Hood has filed a lawsuit against Navient Corporation, charging the student loan lender of targeting state residents with deceptive and predatory loans.

The state, along with the Mississippi Center for Justice, claims that Navient Corporation, Navient Solutions, LLC, and Sallie Mae Bank engaged in widespread abuses across all aspects of its student loan business.

Among the charges is one that claims the defendants misled borrowers about payment options, resulting in higher monthly payments that many consumers could not afford.

The suit, filed in a state chancery court, seeks a number of remedies, including an order for Navient to stop unfair and deceptive practices targeting Mississippi students, reform its loan servicing practices, give up unlawfully gained profits, and provide damages to the state.

No recent complaints

Navient has not yet responded to a ConsumerAffairs request for comment. However, a company spokesman told the Mississippi Clarion Ledger that Navient had not received a single complaint from Hood over the last two years.

The spokesman told the newspaper that Navient's default rate in Mississippi is 9.55 percent, while the state's overall default rate is 15.1 percent.

At a news conference in Jackson, Miss., Hood charged the company with pushing “risky and expensive” subprime loans which were designed to fail to student loan borrowers, specifically targeting low-income borrowers.

In the complaint, Hood maintains that Navient charged excessively high interest rates and fees, despite evidence that these loans would likely default at extraordinarily high rates.

$4 billion in additional debt

In a statement, Hood said that Navient’s actions have contributed to an additional $4 billion in national student debt.

“Students are the future of our state, and the presence of companies in Mississippi that knowingly take advantage of students who need the money to continue their education will not be allowed under my watch.”

Charles Lee, consumer protection director for the Mississippi Center for Justice, said 60 percent of Mississippi student loan borrowers are carrying student loan debt, crippling consumers who are trying to be financially independent.

“Having their loan servicer increase the difficulty of repayment is unconscionable,” he said.

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