After suing Navient in January 2017, the CFPB is now saying the Department of Education is slowing down the lawsuit.
The Consumer Financial Protection Bureau (CFPB) said the Department of Education is attempting to stall the agency’s lawsuit against the student loan giant Navient.
The CFPB sued Navient in January 2017 for allegedly deceiving student loan borrowers and incorrectly processing student loan payments. According to the lawsuit, Navient provided incorrect information to borrowers and failed to inform them about lower payment options, causing many borrowers to pay more than they had to.
And in recent court filings, the CFPB said the Department of Education won’t authorize Navient to turn over documents that are necessary for the lawsuit to move forward. Without these documents, the CFPB is unable to adequately demonstrate how Navient harmed borrowers.
During the Obama Administration, the CFPB and the Department of Education worked together to share resources. But once President Trump appointed Betsy DeVos to Secretary of Education, the Department ended its cooperation with the CFPB. In a letter to the CFPB, the Department claimed the bureau was “using the department’s data to expand its jurisdiction into areas that Congress never envisioned,” The Wall Street Journal reported.
The letter was sent when Richard Cordray was still the director of the CFPB. After Cordray stepped down from his position in November 2017, President Trump appointed Mick Mulvaney to serve as acting director. However, thus far the Department appears to not be sharing information with the watchdog agency.
At the end of May, Kristen Donoghue, the CFPB's assistant director, sent a letter to Secretary DeVos requesting the documents needed for the lawsuit to move forward, the Los Angeles Times reported. In the letter, Donoghue wrote that these documents are necessary for the agency to “quantify the amount of harm suffered by the consumers.”
Navient has argued that it doesn’t have to produce these records until they receive the go-ahead from the Department of Education, the LA Times reported.
Ultimately, student loan borrowers are the ones with the most to lose if the lawsuit fails to move forward. These stalling tactics affect not only the CFPB’s lawsuit but also lawsuits in California, Pennsylvania, and Illinois.
If there is any good news to be found for consumers, it’s that the CFPB’s letter indicates that Mick Mulvaney plans to move forward with the lawsuit against Navient. Many people had speculated that Mulvaney would ultimately drop the lawsuit as he has previously done with others. However, the CFPB declined to comment on whether Donoghue was acting on her own or on behalf of the agency.