November 3, 2022 | Washington, D.C. — Recently, Judge Elizabeth Stong of the US Bankruptcy Court for the Eastern District of New York issued an injunction temporarily halting a years-long plot by the massive student loan company Navient to cheat borrowers out of their right to loan discharge in bankruptcy. As the Student Borrower Protection Center (SBPC) has detailed before, Navient and its peers incorrectly and knowingly represented to borrowers for more than a decade that their loans could not be released in the normal course of personal bankruptcy when, in fact, they could. This scheme blocked millions of borrowers from badly-needed relief on tens of billions of dollars of predatory debt, all in the name of lining Navient insiders’ pockets.
In response to Judge Strong’s ruling, SBPC staff offered the following statements:
“Judge Strong’s injunction is an important first step toward justice after years of shameless lies and illegal collection tactics by Navient,” said Ben Kaufman, SBPC Director of Research & Investigations. “But it is only a first step. The entire student loan industry should now be on notice that it will no longer be able to lie to student loan borrowers about their rights with impunity. It is long past due for student loan companies to be held to account for their predatory schemes—and justice is coming.”
“For at least a decade, student loan industry giants like Navient have banked on and encouraged an environment of borrower confusion around the dischargeability of private student loans to collect on debt that financially-distressed borrowers didn’t actually owe. The court’s recent ruling is the first step towards forcing Navient to disclose to borrowers the same crucial information about dischargeability of unqualified education loans that Navient has made sure Wall Street insiders were privy to all along,” said Amber Saddler, SBPC Counsel.
Read the SBPC’s report on Navient’s years-long scheme to rob borrowers of their bankruptcy rights: Morally Bankrupt: How the Student Loan Industry Stole a Generation’s Right to Debt Relief
Read a recent report from the CFPB indicating that creditors continue to collect on debts already discharged in bankruptcy: 2022 Annual Report of the CFPB Education Loan Ombudsman
To learn more about the SBPC’s work related to shadow student debt, click here.
The Student Borrower Protection Center (SBPC) is a nonprofit organization focused on eliminating the burden of student debt for millions of Americans. We engage in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance racial and economic justice for all.