Sallie Mae Gave Students Expensive Loans It Knew Would Fail, Madigan Says
By Josh McGhee | January 18, 2017 12:48pm | Updated on January 19, 2017 9:29am
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Illinois Attorney General Lisa Madigan announced her office was suing Sallie Mae and Navient Corp. for peddling subprime loans at the Thompson Center Wednesday.
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CHICAGO — For decades, student loan provider Sallie Mae has been slammed by graduates for its lending and collection practices. Now, Illinois Attorney General Lisa Madigan wants Sallie Mae and the company that's taken its place to pay up for "peddling risky and expensive subprime loans ... designed to fail."
On Wednesday Madigan's office filed a lawsuit against Sallie Mae and Navient Corp., which took over Sallie Mae, her office announced in a statement.
"Navient/Sallie Mae treated student loan borrowers unfairly from start to finish," Madigan said.
The federal government also announced charges against Navient Wednesday. About one in four student loan borrowers are serviced through Naviant, according to CNN.
In a statement Wednesday, Navient called the allegations "unfounded." The company said the charges reflect "political motivations" considering the suits were filed as President-elect Donald Trump transitions into the White House.
"Navient welcomes clear and well-designed guidelines that all parties can follow, and we had hoped our extensive engagement with the regulators would achieve this objective. Instead, the suits improperly seek to impose penalties on Navient based on new servicing standards applied retroactively and applied only against one servicer," the statement said.
For decades, student loan provider Sallie Mae and Navient Corp. have been slammed by graduates for their lending and collection practices. Now, Illinois Attorney General Lisa Madigan wants them to pay up for "peddling risky and expensive subprime loans" that were "designed to fail."
View Full Caption
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While the federal lawsuit focuses heavily on repayment rights, the attorney general's lawsuit is a civil suit and covers Navient's "conduct" in originating and servicing loans, along with its debt collection practices, Madigan said at a press conference Wednesday at the Thompson Center, 100 W. Randolph St.
Navient "engaged in aggressive and widespread" subprime lending to originate the loans, and, when borrowers struggled to repay the loans, the company pushed them into "expensive forbearances," which postponed payments without stopping interest rates from climbing, she said. This was done "without counseling them or offering more affordable options," she said.
The company receives government funds to counsel borrowers, Madigan
https://www.dnainfo.com/chicago/20170118/downtown/sallie-mae-sued-student-loan-abuse-lisa-madigan
By Josh McGhee | January 18, 2017 12:48pm | Updated on January 19, 2017 9:29am
@theVoiceofJosh
Twitter Facebook Email More
Illinois Attorney General Lisa Madigan announced her office was suing Sallie Mae and Navient Corp. for peddling subprime loans at the Thompson Center Wednesday.
View Full Caption
DNAinfo/Josh McGhee
CHICAGO — For decades, student loan provider Sallie Mae has been slammed by graduates for its lending and collection practices. Now, Illinois Attorney General Lisa Madigan wants Sallie Mae and the company that's taken its place to pay up for "peddling risky and expensive subprime loans ... designed to fail."
On Wednesday Madigan's office filed a lawsuit against Sallie Mae and Navient Corp., which took over Sallie Mae, her office announced in a statement.
"Navient/Sallie Mae treated student loan borrowers unfairly from start to finish," Madigan said.
The federal government also announced charges against Navient Wednesday. About one in four student loan borrowers are serviced through Naviant, according to CNN.
In a statement Wednesday, Navient called the allegations "unfounded." The company said the charges reflect "political motivations" considering the suits were filed as President-elect Donald Trump transitions into the White House.
"Navient welcomes clear and well-designed guidelines that all parties can follow, and we had hoped our extensive engagement with the regulators would achieve this objective. Instead, the suits improperly seek to impose penalties on Navient based on new servicing standards applied retroactively and applied only against one servicer," the statement said.
For decades, student loan provider Sallie Mae and Navient Corp. have been slammed by graduates for their lending and collection practices. Now, Illinois Attorney General Lisa Madigan wants them to pay up for "peddling risky and expensive subprime loans" that were "designed to fail."
View Full Caption
Facebook/Shutterstock
While the federal lawsuit focuses heavily on repayment rights, the attorney general's lawsuit is a civil suit and covers Navient's "conduct" in originating and servicing loans, along with its debt collection practices, Madigan said at a press conference Wednesday at the Thompson Center, 100 W. Randolph St.
Navient "engaged in aggressive and widespread" subprime lending to originate the loans, and, when borrowers struggled to repay the loans, the company pushed them into "expensive forbearances," which postponed payments without stopping interest rates from climbing, she said. This was done "without counseling them or offering more affordable options," she said.
The company receives government funds to counsel borrowers, Madigan
https://www.dnainfo.com/chicago/20170118/downtown/sallie-mae-sued-student-loan-abuse-lisa-madigan
