The Navient class action: A timeline of key documents

The following is a timeline of events and related documents that pertain to the national class-action lawsuit Evan Brian Crocker et al v. Navient Solutions, LLC and Navient Credit Finance Corporation.

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Navient buys $6.9 billion of student loans from JP Morgan Chase & Co

The sale includes about $3.7 billion in federal student loans and about $3.2 billion in private student loans, according to a Navient press release. $1.6 billion of the federal student loans are securitized.

Illinois sues Navient for peddling "subprime" loans "designed to fail"

“Navient’s actions have led to student borrowers needlessly carrying billions of dollars in debt and the company must be held accountable," said Illinois Attorney General Lisa Madigan, in a press statement.

Washington State sues Navient for "deceptive practices...predatory loans"

"Navient made subprime loans as part of 'preferred lending' programs with schools in order to gain access to highly profitable federally-guaranteed loan volume and 'prime' private student loan borrowers," said Washington Attorney General Bob Ferguson, in a press release.

Sallie Mae announces it will privatize

Sallie Mae, a government-created, government-backed entity that dominates the student loan market, announces that it will privatize within 14 years. Its privatization is complete by 2004.

DoE: Navient subsidiary misleading borrowers re fees, payment options

US Dept of Education terminates the contract of Pioneer, a Navient subsidiary, for "giving inaccurate information at unacceptably high rates" about its loan rehabilitation program and about "the waiver of certain collection fees."

CFPB: Navient threatening borrowers with liens, default when co-signers die

"We continue to receive reports from borrowers discovering that they are in default, when their co-signer, often a parent or grandparent, dies," reports the Consumer Finance Protection Agency. "Consumers describe their confusion when they receive notices to pay in full since they believed their loan to be in good standing and current. Consumers also submitted complaints describing how debt collectors threaten to place liens on property or other assets if the decedent’s family members or estate administrators do not immediately pay the loan in full. But, private student loan borrowers have submitted complaints describing debt collectors’ attempts to collect from a co-signer’s estate even after the estate has been closed and settled."

Consumer groups call on FCC to stop Navient from "harassing" borrowers

Navient has phoned many borrowers "hundreds, and—in some cases—thousands of times...Calls are being made to the borrower’s relatives, neighbors, and even complete strangers—all of whom never provided consent," states a letter from the National Consumer Law Center, Public Citizen, the Consumer Federation of America, Higher Ed Not Debt, Public Knowledge, and The Center for Responsible Learning to the Federal Communications Commission. In their letter, the groups claim that Navient has made "a deliberate decision to flout the TCPA" (Telephone Consumer Protection Act), and call for the FCC to enforce the law.

Navient ordered to pay DoE $22.3 million—six years later still hasn't paid

The student lender "illegally overcharged the federal government for subsidies on government-guaranteed federal student loans," writes US Senator Elizabeth Warren in her letter, citing a 2009 report by the Office of the Inspector General of the Department of Education. "But these funds have still not been repaid."

Fed agency sues Navient, says it "used deception to...cheat borrowers"

Navient "systematically and illegally failed borrowers at every stage of repayment" and "illegally steer[ed] vulnerable borrowers toward options that may cost more," according to a statement by the Consumer Financial Protection Bureau. The CFPB suit also alleges that Navient harmed thousands of borrowers who were “totally and permanently disabled”—including veterans disabled during military service—“by making it appear as if those borrowers had defaulted on their student loans when they had not.”

Navient agrees to suspend collection calls in national class-action suit

In proceedings in Crocker et al. v. Navient, the company agrees to stop calling borrowers with certain student loans who filed for bankruptcy after October 2005. Instead, the company agrees simply to send these borrowers monthly statements.

Navient stock offering: "career training loans are generally dischargeable"

Although Navient tells student borrowers that "student loans are generally not dischargeable in bankruptcy," the company warns its investors—who, if not warned, could sue the company for securities violations—that certain loans are in fact "generally dischargeable" in bankruptcy, and so could put investors at risk of a loss.

Congress creates the Student Loan Marketing Association, aka "Sallie Mae"

Navient's predecessor, Sallie Mae, begins as a "government-sponsored enterprise" designed to support the guaranteed student loan program created by the Higher Education Act of 1965. Sallie Mae becomes the nation's largest handler of student loans.

Navient to CFPB: "No general duty" to "act in the interest of the consumer"

Claiming that its role is to act “in the lender’s interest," Navient argues that "lenders do not owe borrowers any specific fiduciary duties." The company emphasizes that "there is no expectation that the servicer will ‘act in the interest of the consumer.’” This response seems to contradict Navient's PR claims about being "committed to providing expert guidance to our clients and customers on their journey to financial success."

US Senator: Sallie Mae apparently abusing Federal Home Loan Banking System

"Once Sallie Mae borrows the money, initially paying .23% interest, it makes fixed-rate student loans at 25-40 times higher than that," writes Senator Elizabeth Warren in a letter to the head of the Federal Housing Finance Agency. "It was able to borrow at less than one-quarter of one percent interest because the govemment's sponsorship of the Federal Home Loan Banks allows them extraordinarily cheap access to capital. That government sponsorship, however, was intended to bolster the banks' support for the housing market—not to be a backdoor way to subsidize highly-profitable private student lenders."

Change to Bankruptcy Code prohibits discharge of some private student loans

In order to be non-dischargeable, private loans must be "qualified education loans" used for "cost of attendance" at "eligible educational institutions."

Navient, Sallie Mae fined $97 million for cheating military service members

The US Department of Justice orders Navient and Sallie Mae to pay about $97 million in fines for using “unfair and deceptive practices” to charge active-duty service members unlawfully high interest rates.

Sallie Mae creates Navient to take over its loan servicing business

The new company, Navient, services Sallie Mae's $300 billion worth of federal student loans, as well as a large portfolio of private student loans. Sallie Mae continues to function basically as a bank for college students and their families, offering private loans and other financial products.

Congress passes law prohibiting discharge of federal student loans

Changes to the Bankruptcy Code prohibit the erasure, or "discharge," of nearly all federal student loans in bankruptcy during the first five years of repayment. Later amendments to the Code enlarged the scope of section 523(a)(8) until, as of 1994, it restricted discharge of all federal loans and conditional educational grants for a period of seven years unless the debtor could demonstrate undue hardship.

Federal law ends fees to commercial banks handling federal student loans

In spite of a massive lobbying effort by Sallie Mae and commercial banks, the federal government passes legislation prohibiting fees to corporations that handle federal student loans.

Sallie Mae begins securitizing student loans

One year after announcing it would become a private corporation, Sallie Mae begins a new practice of packaging student loans for sale to investors on the stock market. Its first securitization transaction is valued at $1 billion.

Student debtors in bankruptcy bring nat'l class action against Navient

Navient has "engaged in a massive effort to defraud student debtors and subvert the orderly working of the bankruptcy courts," according to the complaint. Plaintiffs allege that Navient purposely misleads student borrowers into believing they cannot legally erase, or "discharge," any of their student debt in bankruptcy, even when they can. Thus, the suit alleges, all across the country, thousands of student debtors who have already declared bankruptcy are paying back student loans that they might have erased in court, if Navient had not misled them about the law.

Navient loses $6.8 billion line of credit after US Senator's inquiry

Two years after it is publicly revealed that Navient borrows from a govt-sponsored bank at 0.28% and lends to students at rates 25-40 times higher, the company loses most of its line of credit from the Federal Home Loan Bank of Des Moines. Navient "was able to borrow at less than one-quarter of one percent interest because the govemment's sponsorship of the Federal Home Loan Banks allows them extraordinarily cheap access to capital," writes Senator Elizabeth Warren in a 2013 letter. "That government sponsorship, however, was intended to bolster the banks' support for the housing market, not to be a backdoor way to subsidize highly-profitable private student lenders." In a subsequent 2015 SEC filing, Navient states that its credit line from the bank had been "reduced from approximately $10.7 billion to...approximately $3.9 billion." Navient states that it "believes this change was made due to an internal policy change" at the bank.

Pennsylvania AG sues Navient for duping students into ruinous loan deals

Lawsuit exposes Navient documents discussing "subprime" loans as a "baited hook" to lure student borrowers, get "preferred lender" status at schools.

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