Beware of Predatory Methods of Obtaining Student Loans
Believe it or not, student loan company Navient is being prosecuted again for predatory lending practices that Pennsylvania Attorney General Josh Shapiro calls “unfair and deceiving.” Navient claims they don’t do anything wrong, but here’s what you should know anyway.
This is the fourth lawsuit against Navient this year. Earlier this year, the Consumer Financial Protection Bureau (CFPB) sued them for questionable business practices, to which Navient responded : “The role of the service staff is to collect payments due from borrowers … there is no expectation that the service staff will act in the interests of the consumer ”.
In this latest lawsuit, Navient responded that they are operating under Ministry of Education regulations. The problem is that under the leadership of Education Secretary Betsy DeVos, the Department of Education has removed protections for borrowers . As one of Student Loan Hero ‘s student loan attorneys put it :
“This third lawsuit by the state attorney general against Navient indicates that states are willing to step in to protect consumers. As the Department of Education rolls out consumer protection measures, we will likely see more states try to protect their citizens from predatory practices. ”
Meanwhile, Student Loan Hero summarizes exactly what Navient is being tried for and therefore what you should look out for as a borrower:
Navient provided predatory loans to students in schools with less than 50 percent graduation rates, expecting students to be unable to repay their loans.
Navient used the subprime hook and bait to become the lender of choice for many schools and increase its volume, even though it knew that subprime student loan borrowers were likely to default.
Following the introduction of an Income-Driven Repayment (IDR) system, Navient deliberately encouraged borrowers to be lenient rather than advising them on more affordable repayment plans .
The Navient said themselves: they are not here to act in your best interest. So let these statements serve as a reminder to take the following precautions when purchasing college studies.
First, it is important to research information such as your school’s graduation rate and employment rate , which can tell you how likely it is that you will pay off your loan on time (and more importantly, avoid default).
However, many commercial colleges did have problems because they misled students about their employment rates. Since most of this data is self-reported and schools make up their own numbers, you’ll want to dig deeper when you do your own research. My College Guide invites you to ask the following questions:
Are job rates “hired” or “hired”? Hiring may mean that the student has gone on to graduate school, while employment means that he has found a job.
Have they been employed or employed in their field of study? There is a huge difference. You can get a job and work in a job with the minimum wage that does not require your education. One school was recently fined $ 30 million for high employment rates, although many of its graduates have worked in fast food and other low-paying jobs.
What is the time frame for statistics? Do students find work after six months, or did they study employment rates years after graduation?
Second, if you are having trouble paying off your student loan, explore the options that are urgent. Abstinence basically allows you to put a student loan on hold for a specified period of time, but after that period has ended, you usually owe interest accrued during that time, making this less than ideal.
Deferral is very similar to abstinence in that it allows you to “pause” your student loan payments if you are going through a difficult financial period. However, with a delay, your interest usually stops accumulating during this period, making this the best option.
Federal loans also come with income-oriented repayment programs , which may be the best short-term option for maintaining your financial position. Depending on your current financial situation, IBR plans may lower your student loan payments and offer some assistance. We wrote here about even more options for paying student loan benefits . The bottom line is that with fewer consumer protections, it is more important than ever to protect yourself and know your options.