Washington state Attorney General Bob Ferguson's (right) lawsuit against Navient will go to trial after a motion to dismiss the case was rejected. 

Navient, the largest student loan company in the United States, has lost two separate dismissal motions regarding two separate lawsuits filed against the student loan servicing company.

The two losses come after three different lawsuits were filed against Navient in January 2017 by the Consumer Financial Protection Bureau (CFPB), the state of Washington, and the state of Illinois. While the motion to have the Illinois lawsuit dismissed is still pending, the motions for the CFPB case and the Washington state case were both denied.

All three entities claim that Navient mistreated hundreds of thousands of student loan borrowers by taking shortcuts to reduce expenses. Additionally, the CFPB alleges that Navient added roughly $4 billion in interest charges to the loan balances of student debtors.

On Friday, August 4th, U.S. District Judge Robert D. Mariani tossed out Navient’s motion to have the CFPB lawsuit thrown out. In his ruling, Judge Mariani explained that while Navient may have complied with the Higher Education Act, Department of Education regulations, and its own loan servicing contract with the Department of Education, that did not mean the private student loan company could go back on its obligation to not commit unfair, deceptive, or abusive acts in violation of the Consumer Financial Protection Act.

Further, Mariani threw out Navient’s argument that student loan borrowers could not rely on the student loan company to consult them on their options for repaying student loans. According to Mariani, previous public remarks made by Navient “created a duty to act in accordance with their own statements.”

Interestingly, a study done by The Student Loan Report found that Navient has been the most complained about student loan servicer in 2017. The Student Loan Report did the same study in 2016, and Navient once again topped that list.

The August 4th decision by Judge Robert Mariani comes on the heels of a July 7th decision by a Washington state judge to not dismiss a separate lawsuit against Navient. Judge Veronica Alicea-Galvan of Seattle denied Navient’s motion to dismiss Washington state’s Attorney General Bob Ferguson’s lawsuit.

Another dismissal motion filed by Navient, this time regarding a lawsuit filed by Illinois Attorney General Lisa Madigan, has yet to receive a ruling from Judge Kathleen M. Pantle in Chicago. Navient believes that the Illinois and Washington cases should be thrown out mainly because state law is secondary to federal laws that govern the nation’s largest student loan servicer.

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Now, both the Washington state and CFPB lawsuits will move toward a trial, which will allow the prosecutors to demand more evidence from Navient. Presumably, more evidence against Navient would push the student loan company towards a settlement. All of these legal proceedings continue to bog down Navient, which is in the midst of trying to secure a contract with the Trump administration to continue collecting payments from federal student loan borrowers.

“We are confident we will prevail in the legal process,” said Patricia Christel, a Navient spokeswoman.

The Student Loan Report has provided detailed coverage of the lawsuits surrounding Navient. Back in January, it was reported that the CFPB’s lawsuit claimed Navient committed deceptive acts such as giving the wrong payment information to borrowers, processing their payments incorrectly, not responding to customer complaints, and falsely reporting that injured military veterans, who can qualify for student loan forgiveness, had defaulted on their loans, which damaged their credit score.

In their lawsuit, the CFPB also charged Navient with pushing borrowers that were struggling with repayment away from income-driven repayment plans, which could have lowered their monthly payments. In fact, Navient steered student debtors to enter forbearance, which temporarily stops payments, but the borrower still accrues interest.

The lawsuit filed by Attorney General Bob Ferguson on behalf of the state of Washington included many of the same claims that the CFPB made. Additionally, Ferguson’s lawsuit argued that Navient handed out subprime, predatory loans to students at schools with a less than 50 percent graduation rate. Navient was also offering a cosigner release promotion where friends or family could have cosigned on a loan, with the understanding that the cosigner would be released once the borrower is proven to make timely payments. However, Navient made it extremely difficult for the cosigners to be approved for release.

Image Copyright © Washington State House of Republicans