Magazine article American Banker

Navient Hit with Pa. Lawsuit, Adding to Servicer's Troubles

Magazine article American Banker

Navient Hit with Pa. Lawsuit, Adding to Servicer's Troubles

Article excerpt

Byline: Kevin Wack

The state of Pennsylvania sued the nation's largest student loan company on Thursday, alleging that Navient Corp. perpetrated a wide range of consumer abuses both before and after the financial crisis.

The complaint was filed in U.S. District Court by the state's Democratic attorney general, Josh Shapiro. It demonstrates that despite the recent appointment of more industry-friendly regulators in Washington, D.C., financial service companies still face significant legal threats from state capitals.

Shortly before President Trump's inauguration in January, similar lawsuits were filed against Navient by the Consumer Financial Protection Bureau and attorneys general in Illinois and Washington state.

"The more businesses like Navient put their bottom line ahead of the interests of their customers and consumers, the more vigilant we will be to protect Pennsylvanians and hold businesses like Navient accountable for their misconduct," Shapiro said Thursday in a press release.

The Pennsylvania lawsuit alleges that various lending and loan servicing activities at Navient and its corporate predecessor, Sallie Mae, ran afoul of state and federal consumer protection laws.

Some of the practices at issue date back all the way to the early 2000s, long before Sallie Mae was split into two companies, Navient and SLM Corp. Following the 2014 split, Navient assumed the liabilities of the predecessor companies.

On Thursday, Navient called the state of Pennsylvania's allegations "completely unfounded" and vowed to defend its record in court.

But the lawsuit appeared to rattle investors in Wilmington, Del.-based Navient. The company's stock price was down 14% in late-day trading Thursday, though it was hard to separate the lawsuit's impact from investors' reaction to an acquisition that Navient announced late Wednesday. …

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