Senator Warren (center) with a couple of colleagues at a campaign rally in Massachusetts.
Democratic Senator Elizabeth Warren expressed her concerns about Navient's acquisition of Earnest and further involvement in the private student loan market according to an interview with The International Business Times. She even mentioned that Navient should not be allowed to service federal student loans.
She suggested that the deal may negatively impact student loan borrowers in several ways. One of her concerns included fears that Navient would start pushing student loan refinancing to federal student loan borrowers, transitioning these federal loans into the private loan market.
Under such a scenario, a student loan borrower would lose federal protections and benefits, costing them more money in the end according to Senator Warren.
For instance, some federal borrowers could be eligible for certain loan forgiveness programs, but that possibility would cease to exist if Navient got them to refinance. Additionally, a federal student loan borrower who refinanced would lose access to income-driven repayment programs.
According to IB Times, Navient refuted these allegations, saying they aimed to attract media attention in an official response to the public. The student loan servicer’s spokeswoman, Patricia Christel, asserted the company’s commitment to aiding student borrowers effectively.
Christel referred to Warren’s comments as “a pattern that misrepresents the good work we do to help borrowers navigate a complex system and avoid default,” referring to the student loan repayment process overall.
Further bolstering their case, Christel reminded everyone that the contract with the Department of Education bans Navient from using government data for consumer marketing purposes. This would bar them from using an individual’s federal student loan data to recommend student loan refinancing into the private market.
This recent development isn’t too surprising. Sen. Elizabeth Warren is proactive on the issue of student loans, and Navient, the largest servicer of federal student loans, has been in the headlines almost all year.
Elizabeth Warren has made it clear that she would take action when it comes to protecting student loan borrowers. One of her actions involved the newly founded “DeVos Watch” initiative, where she essentially planned on scrutinizing the Education Secretary’s every move, in the name of student loan borrowers’ best interests.
Furthermore, just last month, Senator Warren requested an SEC probe into Navient, suspecting insider trading when a share sale occurred under allegedly suspicious circumstances.
On that note, Navient has been put under the spotlight for other reasons besides suspected insider training.
It is well known that Navient was sued by the Consumer Financial Protection Bureau in January for allegedly misleading and failing student loan borrowers. Navient defended itself, saying the suit was unwarranted and baseless from a legal perspective.
image copyright © Tim Pierce