In its last years, the Obama administration tried to rein in the student loan industry and promoted more options for reduced repayment plans for federal loans. Since then, Donald Trumps education secretary,
Betsy DeVos, has reversed or put on hold changes the former education secretary John B Kings office proposed and appears bent on further loosening the reins on the student loan industry, leaving individual students little recourse amid bad service.
In late August, DeVoss office
announced that it would stop sharing information about student loan servicer oversight with the federal consumer watchdog agency known as the Consumer Financial Protection Bureau, or CFPB.
Earlier this year, as complaints grew, the CFPB
sued Navient for allegedly misleading borrowers about the repayment options it is legally obligated to provide.
A central allegation is that Navient, rather than offering income-based repayment plans, pushed some people into a temporary payment freeze called forbearance. Getting placed into forbearance is a good Band-Aid but can be a terrible longer-term plan. When an account gets placed in forbearance, its interest keeps accumulating, and that interest can be added to the principal, meaning the loans only grow.
Lynn Sabulski, who worked in Navients Wilkes-Barre, Pennsylvania, call center for five months starting in 2012, said she experienced first-hand the pressure to drive borrowers into forbearance.
Performing well meant keeping calls to seven minutes or under, said Sabulski. If you only have seven minutes, the easiest option to put a borrower in, first and foremost, is a forbearance. Sabulski said if she didnt keep the call times short, she could be written up or lose her job.
Navient denies the allegations, and a spokeswoman told Fusion via email seven and a half minutes was the average call time, not a target. The company maintains caller satisfaction and customer experience are a significant part of call center representatives ratings.
But in a 24 March motion it filed in federal court for the CFPBs lawsuit, the company also said: There is no expectation that the servicer will act in the interest of the consumer. Rather, it argued, Navients job was to look out for the interest of the federal government and taxpayers.
Navient does get more per account when the servicer is up to date on payments, but getting borrowers into a repayment plan also has a cost because of the time required to go over the complex options.
The same day the CFPB filed its lawsuit, Illinois and Washington filed suits in state courts. The offices of attorneys general in nine other states confirmed to Fusion that they are investigating the company.
At a recent hearing in the Washington state case, the company defended its service: The States claim is not, you didnt help at all, which is what you said you would do. Its that, you couldve helped them more. Navient insists it has forcefully advocated in Washington to streamline the federal loan system and make the repayment process easier to navigate for borrowers.
And its true, Navient, and the broader industry, have stepped up efforts in recent years to influence decision makers. Since 2014, Navient executives have given nearly $75,000 to the companys political action committee, which has pumped money mostly into Republican campaigns, but also some Democratic ones. Over the same timespan, the company has spent more than $10.1m lobbying Congress, with $4.2m of that spending coming since 2016. About $400,000 of it targeted the CFPB, which many Republican lawmakers want to do away with.
Among the 22 former federal officials who lobby for Navient is the former US representative Denny Rehberg, a Republican, who once
criticized federal aid for students as the welfare of the 21st century. His fellow lobbyist and former GOP representative Vin Weber sits on a board that has aired attack ads against the CFPB, as well as on the board of the for-profit college ITT Tech, which shuttered its campuses in 2016 after Barack Obamas Department of Education accused it of predatory recruitment and lending.
In response to what they see as a lack of federal oversight, California, Connecticut, Massachusetts, and the District of Columbia recently required student loan servicers to get licenses in their states. Not surprisingly, Fusion found a sharp increase in Navients spending in states considering such regulations, with the majority of the $300,000 in Navient state lobbying allocated since 2016.
In Maine and Illinois, the legislatures were flooded with Navient and other industry lobbyists earlier this year, after lawmakers proposed their own versions of the license bills. The Maine proposal failed after Navient argued the issue should be left to the federal government. The Illinois bill passed the legislature, but the Republican governor, Bruce Rauner, vetoed it in August following lobbying from an
industry trade group. Rauner said the bill encroached on the federal governments authority.
Nathan Hornes racked up $70,000 in student loans while attending a for-profit, unaccredited college. Photograph: Fusion
Researchers argue more data would help them understand how to improve the student loan process and prevent more people from being overwhelmed by debt. In 2008, Congress made it illegal for the Department of Education to make the data public, arguing that it was a risk for student privacy. Private colleges and universities
lobbied to restrict the data. So, too, did Navients predecessor, Sallie Mae, and other student loan servicing companies.
Today, companies like Navient have compiled mountains of data about graduations, debt and financial outcomes which they consider proprietary information. The lack of school-specific data about student outcomes can be life-altering, leading students to pick schools they never would have picked. Nathan Hornes, a 27-year-old Missouri native, racked up $70,000 in student loans going to Everest College, an unaccredited school, before he graduated.
Navient hasnt done a thing to help me, Hornes told Fusion. They just want their money. And they want it now.
Hornes loans were recently forgiven following state investigations into Everests parent company Corinthian. But many other borrowers still await relief.
Better educating teens about financial literacy before they apply to college will help reduce their dependence on student loans, but that doesnt change how the deck is stacked for those who need them. A few states have made
community colleges free, reducing the need for student loan servicers.
But until the Department of Education holds industry leaders like Navient more accountable, individual states can fix only so much, insists Senator Elizabeth Warren, one of the industrys most outspoken critics on Capitol Hill.
Navients view is, hey, Im just going to take this money from the Department of Education and maximize Navients profits, rather than serving the students, Warren said. I hold Navient responsible for that. But I also hold the Department of Education responsible for that. They act as our agent, the agent of the US taxpayers, the agent of the people of the United States. And they should demand that Navient does better.
Laura Juncadella, a production assistant for The Naked Truth also contributed to this article
The Naked Truth: Debt Trap airs on Fusion TV 10 September at 9pm ET. Find out where to watch here
This article was updated on 6 September 2017 to correct the spelling of Denny Rehbergs surname. We originally had it as Rehlberg.