New Navient Investigations Shed Light on How Courts Continue to Reject DeVos’s Efforts to Shield Student Loan Companies
By Tamara Cesaretti | November 22, 2019
Student debt has more than doubled over the past decade as sloppy, predatory servicing practices have added insult to injury for millions of struggling borrowers. In the past two years, federal and state enforcement officials across the country have repeatedly charged student loan servicing giant Navient with abusing student loan borrowers. Allegations include passing on more than $4 billion in unnecessary interest charges to more than one million borrowers in financial distress.
At the same time, the company’s army of lawyers and lobbyists argue these practices are simply a misunderstanding, and that Navient bears no legal responsibility for these abuses.
Navient has a powerful ally in this fight—Education Secretary Betsy DeVos. Secretary DeVos has engaged in an unprecedented campaign to obstruct efforts by federal and state enforcement officials to hold Navient accountable. Because of DeVos’s scheme with the student loan industry, as law enforcement has sought to investigate or take action against the company, states have run into hurdles in obtaining critical documents and evidence to build their cases.
Fortunately for borrowers, DeVos and Navient are losing this fight in court. Navient is being sued by the Consumer Financial Protection Bureau and the States of Illinois, Washington, Pennsylvania, California, and Mississippi for illegal servicing practices.
In addition, new court records show that Navient and DeVos conspired to obstruct investigations by the Colorado Attorney General and by the District of Columbia Attorney General. In each case, a judge ruled that law enforcement officials had the right to demand documents and information from the company, allowing investigations into Navients’ abuses to proceed.
The outcome from courtrooms across the country is resounding: Navient cannot withhold evidence from state and federal law enforcement working to investigate and take action against the company for predatory practices.
A Timeline of Failed Efforts to Obstruct Consumer Protection Lawsuits and Investigations
September 17, 2019
Colorado filed its first subpoena for the requested documents almost two years ago, on January 29, 2018. However, Navient rejected the state’s authority and refused to turn over information for federal student loans unless they were compelled by a judge to do so, impeding Colorado’s investigation. After several meetings between Colorado and Navient, the parties together sought a court order.The District Court of Denver County ordered Navient to disclose documents and records.
District of Columbia v. Navient
August 5, 2019
The District of Columbia served its first subpoena to Navient more than two and a half years ago, on May 2, 2017. DC timely complied with Navient’s requests for a confidentiality agreement to release documents, but Navient still refused to produce them. After multiple attempts to obtain the requested documents, Navient informed DC that requests for data should be made directly to the Department of Education, pursuant to the Privacy Act. Because this argument had already been decided for the petitioner in CFPB v. Navient, DC then petitioned the Superior Court of the District of Columbia for enforcement of its subpoena for documents and records from Navient. The Court ordered Navient to disclose documents and records.
October 17, 2018
A federal District Court in the Middle District of Pennsylvania stated that Navient was wrong in asserting that documents in the hands of federal contractors are shielded by the Privacy Act. The Privacy Act does not bar disclosure of the records, despite assertions to the contrary by Navient and by Education Secretary Betsy DeVos.
September 21, 2018
The King County Superior Court stated that the Privacy Act was not a bar to the production of records and documents related to loans owned by the federal government because Navient, as a contractor, is no more immune from the requirements of discovery than the government itself would be.
August 10, 2018
A federal District Court in the Middle District of Pennsylvania held that Navient’s records are not under the control of the Department of Education, and Navient could not use the Privacy Act to shield records, documents, and call recordings from CFPB enforcement attorneys. Because these documents and records are in the physical possession of Navient, even if they are owned by the Department, the Privacy Act does not provide a discovery privilege that would permit Navient to refuse to produce this information to the CFPB.
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Tamara Cesaretti is a Counsel at the Student Borrower Protection Center. She joined the SBPC after developing a passion for ending the student debt crisis while working as a civil rights policy advocate at the intersection of economic justice and educational opportunities.