Advocates File Amicus Brief to Defend Students Against Navient Corporation

NJ Citizen Action called for two bills extending and reforming NJEDA corporate tax incentive programs to be held in the Assembly Commerce and Economic Development Committee, saying they don't protect taxpayer dollars from misuse or guarantee a return on investment.
Advocates File Amicus Brief to Defend Students Against Navient Corporation
 
Washington, D.C.—New Jersey Citizen Action, The Center for Responsible Lending, the Student Borrower Protection Center the Pennsylvania Senior Law Center and the Lawyers’ Committee for Civil Rights Under Law filed an amicus brief today in the Third Circuit Court of Appeals in support of Pennsylvania Attorney General Josh Shapiro’s lawsuit against Navient Corporation, one of the nation’s largest student loan servicers.

The brief focused on the impact of improper student loan servicing practices on student borrowers, particularly seniors and borrowers of color, and argues that the Higher Education Act (HEA) does not broadly preempt state law regulation of federal student loan servicers based on misrepresentation claims. In the case, Commonwealth of Pennsylvania v. Navient Corporation et al., Shapiro alleges Navient violated Pennsylvania’s laws by steering borrowers towards costly repayment programs or into forbearance, which allows students to temporarily postpone repayment while interest continues to accrue.

“State protections and laws for student loan borrowers are critical to addressing the $44 billion student loan debt crisis in New Jersey,” said Phyllis Salowe-Kaye, Executive Director of New JerseyCitizen Action“Student loan servicers must be held accountable for deceptive and abusive practices that trap student loan borrowers, including far too many senior and minority borrowers, into ruinous debt. For this reason New Jersey enacted its own landmark student loan borrower protection law earlier this year.


“We now stand with our allies against Navient’s assertion that the federal HEA allows servicers to circumvent broader state consumer protection laws and against the company’s false argument that HEA prevents borrowers from bringing forth claims of misrepresentation by Navient, or any servicer, to state authorities and regulators.”

The landmark student loan borrower law New Jersey enacted earlier this year calls on the state Department of Banking and Insurance to establish strong lending standards and a licensing requirement for any student loan servicer operating in the state. The law also gives DOBI the power to enforce standards, fine violators, designate a student-loan ombudsman, and will protect students from abusive practices by loan servicers who manage and collect student debt.

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