US educators fight over student debt and loan fraud

published 5 October 2018 updated 8 October 2018

American Federation of Teachers’ members have filed a class-action lawsuit against the student loan servicer Navient for misleading borrowers and called for immediate action.

No to predatory activity from loan servicers

On 3 October, American Federation of Teachers (AFT) members and other public employees from across the US filed a class-action lawsuit against the for-profit federal student loan servicer Navient, alleging that Navient misled people about their options regarding enrolment in the Public Service Loan Forgiveness (PSLF) Program.

By supporting the class-action lawsuit, the AFT seeks to reform Navient’s practice of giving student loan borrowers insufficient and inaccurate information about their loan repayment options for its own financial gain. The class action also attempts to obtain compensation for the financial injury that countless student loan borrowers have already suffered as a result of Navient’s misconduct.

“We believe public sector workers - like many of the 1.7 million AFT members who are teachers, school staff and nurses - are paying millions of dollars more toward their student loans than if they had gotten accurate information from Navient,” according to AFT President Randi Weingarten.

Instead of helping borrowers, she stresses, Navient spends as little time as possible with them. Navient employees were given financial incentives to keep calls with borrowers short - under seven minutes. This has led to thousands of public employees being steered into the wrong repayment plans and/or away from applying for PSLF.

“As the lawsuit against Navient moves forward, we need to continue to hold contracted private servicers of the U.S. Department of Education - like Navient - accountable for their responsibility to help student loan borrowers struggling with the burden of student debt and to ensure that loan servicers are not engaged in predatory activity”, Weingarten added.

More than 40 million people in the U.S. have taken out student loans totalling nearly $1.5 trillion. In a recent survey, eight in 10 AFT members said that student debt was a major burden and challenge, more than any other kind of debt.

PSLF was supposed to benefit the many

“It was not supposed to be this way,” Weingarten notes. “The Public Service Loan Forgiveness Program was adopted to help bridge the gap between the rising costs of higher education requirements for public service positions. It was supposed to benefit the many.”

At the end of 2016, approximately 32 million borrowers were repaying loans that were potentially eligible for PSLF. After 10 years of payments, the program would allow public service employees’ loans to be forgiven and the burden removed.

“AFT members are leading the way on this lawsuit, and we stand behind them, because this is a union issue,” the AFT leader underlines. “We’ve heard our members’ concerns and complaints about the ruinous effect of the debt on their lives, and we’ve taken on the student debt crisis as a major campaign. It’s an epidemic, and people are suffering. The stories from members haunt me—from new teachers who can’t stay in the profession because they’re defaulting on their loans, to experienced professionals who can’t retire because they can’t afford payments on their kids’ loans. This crisis affects us all.”

Take action now!

Weingarten maintains that as the head of the Department of Education, Secretary Betsy DeVos has the power to require companies like Navient to help people get accurate information about PSLF. The AFT president is asking activists and concerned citizens to take action and send DeVos a letter describing people’s frustration with student loan servicers.