Navient Corporation Under Fire For Predatory Practices

Inside Subprime: Aug 3, 2018

By Ben Moore

Mississippi’s Attorney General, Jim Hood, and the Mississippi Center for Justice is suing Navient Corporation under the claim that the company has used “deceptive and predatory lending practices” which have subsequently hurt thousands of students in the state of Mississippi. Hood claims that Navient purposefully provided loans that were “designed to fail” and deliberately targeted borrowers with low-income while also charging extremely high interest rates.

In response, Navient released a statement saying that over the past “two years, there have been zero borrower issues forwarded to us from the Mississippi attorney general’s office.” Navient also highlighted that their default rate is currently at 9.55 percent, which is “considerably lower than the state’s overall default rate of 15.1 percent.” They also claim that the name of the customer discussed in the press conference announcing the lawsuit could not be located within their database.

Hood believes that Navient could be liable by up to $10,000 per instance of predatory practice aimed at college students. One of the charges against Navient claims the company “misled borrowers about payment options, resulting in higher monthly payments that many consumers could not afford” and that the company created over $4 billion in national student loan debt.

Hood claims that Navient has been the preferred lender on Mississippi university campuses because the company has offered many subprime loans, and stated the resulted high debt is the main factor in Mississippi’s “brain drain”, a term used to describe college graduates that leave the state because they are unable to find jobs within the state that provide enough income to pay off their high college debt. While the nation has seen a large increase in the millennial population from 2010 to 2016, the state of Mississippi has seen a drop in millennials by 3.6 percent over the same time frame.

Mississippi is currently ranked as the fourth highest in the United States in regards to students defaulting on their student loans. With student debt so high, Hood attributes the high debt to the increase in tuition the state has seen since he first took office in 2004. State support for Mississippi public universities has also decreased, with state support now accounting for 28 percent of the eight public universities’ total revenue, down from 56 percent back in 2000.

Charles Lee, the consumer protection director for the Mississippi Center for Justice, said that Navient creating such a “difficulty of repayment” is “unconscionable.” Borrowers that feel that they have been subject to any predatory or deceptive practice by Navient are able to file a claim at mscentureforjustice.org, or call the consumer fraud hotline created by Hood at (800) 281-4418.

Learn more about the dangers of payday loans in the United States in all of our Subprime Reports.