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Navient seeks to narrow CFPB’s student loan servicing lawsuit

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Navient Corp. is seeking a speedy resolution to the Consumer Financial Protection Bureau’s 2-year-old lawsuit against the student loan servicer.

On Thursday, it filed a request with a federal judge in Pennsylvania for a summary judgment in two counts against it, accusing the CFPB of failing to provide evidence.

The CFPB filed suit against Navient in January 2017, when Richard Cordray was its director, alleging the servicer had unfairly and abusively “steered” borrowers into forbearance, which allows them to temporarily stop making payments, “rather than an income-driven repayment plan,” which reduces the amount of monthly payments.

“Two years after filing suit—and more than five years after launching its investigation—the CFPB has not only failed to show that ‘hundreds of thousands’ of borrowers were harmed, it has not identified a single borrower who supports its allegations of ‘steering,' " Navient said in the motion.

A summary judgment is a request to rule on the facts, without going to trial. In its motion, Navient said narrowing the case is warranted because the CFPB’s steering allegations are not supported. The CFPB identified 32 borrowers who were harmed, according to the filing. After Navient deposed three, who admitted to receiving income-driven repayment information, the CFPB promptly withdrew 15; it has since removed three others and added one. Fifteen borrowers remain, and Navient has deposed all but one. “All 14 borrowers whom Navient deposed were informed about IDR, including prior to and immediately after obtaining forbearance,” Navient said in the motion.

In the filing, Navient notes that servicers are not permitted to enroll borrowers in income-driven repayment over the phone, and that it followed phone calls with further information about the program. It also noted that borrowers often request forbearance to allow time to complete paperwork for income-driven repayment, which generally requires tax returns or pay stubs.

“The CFPB cannot meet its burden to show a genuine dispute of material fact with respect to whether Navient informed borrowers about IDR,” the motion states. “At a minimum, a ruling as to Navient’s conduct toward the identified borrowers would serve to define the relevant issues for trial.”

The CFPB did not immediately respond to a request for comment.

The bureau's January 2017 suit also alleged that Navient failed to properly apply borrowers’ payments and deceived private loan borrowers about releasing their cosigners from their loans. Thursday's motion does not speak to these allegations.

In addition to the CFPB’s lawsuit, Navient faces consumer abuse allegations leveled by Pennsylvania, Illinois, California and Washington state.

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Student loans Law and regulation Student loan ABS Navient CFPB
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