Potentially millions of teachers, social workers and other public servants wasted money repaying loans because a major student-loan company obstructed access to debt forgiveness to which they were entitled, a new lawsuit charges.
The class-action suit filed Wednesday against Navient by borrowers who are eligible for Public Service Loan Forgiveness, claims that the company provided these public servants with wrong information, extending the amount of time they would need to wait before having their loans discharged under the program and causing them to spend money unnecessarily on their debt.
The borrowers also allege that Navient’s company policies incentivized this behavior. The suit, funded by the American Federation of Teachers, claims that Navient encourages its staffers to spend just minutes on the phone with borrowers, but counseling borrowers on their options can take significantly longer.
The suit also alleges that Navient had reason to make it more difficult for borrowers to qualify for PSLF — once a borrower is deemed eligible for the program, their loan is moved to another company — and that Navient wanted to ensure they continued to receive the money associated with the account.
Navient “purposefully and systematically trapped teachers, nurses and other public-service workers under a mountain of student-loan debt rather than providing them the opportunities to reduce this debt through the public service loan forgiveness program,” Randi Weingarten, the president of AFT said on a conference call with reporters.
A representative from Navient declined to comment on the allegations.
The public loan forgiveness program has faced a rocky start
The suit is the latest indication of the challenges borrowers face accessing PSLF. Roughly 28,000 borrowers have applied so far to have their loans discharged and just 96 were approved.
The program, which was signed into law in 2007, allows public servants to have their loans forgiven after 10 years-worth of payments. But it appears at least thousands of borrowers have been tripped up by the eligibility criteria, which require borrowers have the right type of federal student loan, work in the correct type of job (the government at all…