America's largest student loan company was also the most-complained-about financial services company in the country over the last three months, according to new government data released on Tuesday.
Navient, formerly known as Sallie Mae, was the subject of more consumer complaints than Wells Fargo, Bank of America, or credit reporting agencies like Experian, a report from the Consumer Financial Protection Bureau said in its monthly report.
From November through January, complaints against Navient leapt up by 813% compared to the same period a year prior, the CPFB said, spiking sharply in the days after the bureau said it was suing the student loan servicer for misleading borrowers and bungling students' payments.
Among the most serious allegations in the government's suit were claims that Navient steered student loan borrowers struggling to make their payments into a short-term solution that ultimately resulted in higher payments, rather than income-based repayment programs. Navient denied the allegations in the CFPB suit, pointing to lower-than average default rates and high enrollments in income-based plans.
A BuzzFeed News investigation found in that Navient call centers, the high-pressure environment prioritized sometimes led employees to cut corners with student loan borrowers.
In a statement, Navient spokeswoman Patricia Christel said that that the company's analysis had found that many borrowers' issues were in fact related to federal loan policy, such as issues with bankruptcy reform and private loan rehabilitation. She said the company had revamped its website and phone system based on customer feedback.
Other student loan servicers also saw sharp increases from November through January, according to the CFPB report, in part because last year the bureau started taking complaints about federal student loans, in addition to private ones. Overall, the report said, complaints about student loan servicing increased 380%.
But with 1,400 complaints in the three-month period surrounding the lawsuit, Navient topped all of the country's major banks and credit reporting agencies. Overall, the company still has far fewer complaints than most big banks.
The CFPB has repeatedly found that the federal government's student loan servicing program is riddled with problems, making it difficult for borrowers to get information, correct errors with their loans, and enroll in repayment programs. But earlier this month, education secretary Betsy DeVos ordered the Education Department to halt a series of Obama administration efforts intended to streamline the struggling program.
Most significantly, DeVos backtracked on a memo from her predecessor that would have made a loan servicer's past performance — including a history of complaints — one of the most important pieces of criteria in awarding a lucrative government contract. That rule was expected to hurt loan servicers, including Navient, that attracted large numbers of consumer complaints.
Molly Hensley-Clancy is a business reporter for BuzzFeed News and is based in New York. She covers the intersection of business and education.
Contact Molly Hensley-Clancy at firstname.lastname@example.org.
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