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Speaker 1: Naviyant Corp, the largest US student loan servicer, is under

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Speaker 1: fire for allegedly mistreating borrowers to the tune of four

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Speaker 1: billion dollars. Last week, a federal judge refused to dismiss

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Speaker 1: a lawsuit against Navant filed by the U s Consumer

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Speaker 1: Financial Protection Bureau. The suit, which was filed in the

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Speaker 1: waning days of the Obama administration, accuses Naviant of a

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Speaker 1: raft of abuses that minimized its own costs while leaving

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Speaker 1: borrowers to pay off more debt. It's one of several

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Speaker 1: facing Navant, which is also being sued by attorneys general.

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Speaker 1: Attorneys general in Illinois and Washington. With me to talk

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Speaker 1: about the lawsuit is Dalia Jimenez, professor at the University

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Speaker 1: of Connecticut School of Law and a founding member of

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Speaker 1: the CFPB. Dali, thanks for joining us. Can just start

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Speaker 1: by telling us who this company, Navigant is, because I'm

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Speaker 1: not sure that everybody listening is very familiar with them. Yeah, So, um,

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Speaker 1: if they're not familiar with them, they're probably familiar with

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Speaker 1: Sally May, which is the company that Um Navigant um

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Speaker 1: came from, as it were, Um sally May. I think

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Speaker 1: partly because UM they were having UH some pr issues,

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Speaker 1: changed their name to Navyant, and you know, they sort

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Speaker 1: of split off some businesses and now Naviants is UM

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Speaker 1: handling all student loan servicing and any student owan private

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Speaker 1: student own originations UM that are going on, which are

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Speaker 1: pretty small, but basically they are they're handling tht or

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Speaker 1: so of the student loan servicing for the federal government,

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Speaker 1: which means they have about UM twelve million Americans um

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Speaker 1: UH as part of their portfolio of loans. And turning

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Speaker 1: to the lawsuit, what is it that Navigant allegedly did

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Speaker 1: wrong here? UM, Well, it's kind of a lot of stuff. UM.

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Speaker 1: The CFPB and Attorneys General Madigan UM and um UH

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Speaker 1: Ferguson are arguing that UM, there were a lot of

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Speaker 1: different problems. Some that origination with private student loans UM.

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Speaker 1: That private that that individuals who put into risky subprime

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Speaker 1: loans that were designed to fail UM. And then the

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Speaker 1: bulk of the problem seems to be coming in on

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Speaker 1: the servicing UM and in particular the servicing of federal

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Speaker 1: loans that UM, where the students were having trouble making

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Speaker 1: payments or the borrowers or having trouble making payments UM.

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Speaker 1: One of the bigger allegations is that UH navigant um

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Speaker 1: UH put students or recommended h forbearance and the forum

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Speaker 1: and deferral plans UM instead of putting students into income

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Speaker 1: based repayment plans that were available to them and which

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Speaker 1: sometimes might have meant that they had to pay zero

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Speaker 1: dollars per months um U. Instead they paid zero dollars

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Speaker 1: per months UM, but enough forbearance or the furrow um

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Speaker 1: that the interest was accumulating UM and they UM and

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Speaker 1: and eventually they would be they would have to sort

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Speaker 1: of pay all of that whenever the deferral or the

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Speaker 1: forbearance UM ended. And the CFP is alleging that UM

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Speaker 1: four billion dollars in interest charges accrued for referral deferrals

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Speaker 1: and forbearances UM in a five year period or four

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Speaker 1: and a half year period UM. And they think that

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Speaker 1: a lot of that was illegitimate. And so this ruling

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Speaker 1: from a federal judge last week, what is the significance

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Speaker 1: of that ruling in in terms of this lawsuit. Well,

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Speaker 1: Navian was trying this is a motion to the smiths.

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Speaker 1: Naviant was trying to basically say at least as to

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Speaker 1: some of the allegations. UM. They the CFPB was not UM. UM,

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Speaker 1: you know that the part of the lawsuits should be

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Speaker 1: thrown out. UM. The court ruled on sort of all

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Speaker 1: of their allegations, UM, very thoroughly. And UM. The first

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Speaker 1: one that that naviant was. The first acument that we're

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Speaker 1: trying to make was that the CFPB lacked statutory authority

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Speaker 1: to file a lawsuit against them before engaging in any

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Speaker 1: rulemaking about what would constitute an unfair or deceptive practice

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Speaker 1: in the student owned service seeing area. UM. And if

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Speaker 1: that were the case, then you know, we basically have

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Speaker 1: many many years of rulemaking before any losses could be filed.

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Speaker 1: And the court dismissed that argument pretty quickly. UM. They

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Speaker 1: also challenged the constitutionality of the structure of the c STB.

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Speaker 1: And there's been a number of lawsuits by UM by

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Speaker 1: entities that were steered by the CFTV who countered with UM.

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Speaker 1: You know, this argument that the CFTC was a legitimate

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Speaker 1: or that the structure was on constitutional in some way. UM.

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Speaker 1: Only one of them, the PhH case, UH is UM.

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Speaker 1: There was ever an opinion that agreed with UM. The

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Speaker 1: company's UM in this regard and that one is up

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Speaker 1: on bank review. Um. And UM. Basically the court here said, uh,

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Speaker 1: you know, in many, many pages of argument, it does

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Speaker 1: not agreed with everyone else who said, you know, there's

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Speaker 1: no constitutional issue here. Um, there's no the director. Um,

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Speaker 1: you know, structure is passes stitutional muster um, and the

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Speaker 1: CFB can continue with this lawsuit. Um. The other arguments

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Speaker 1: they had were a little more on point and frankly

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Speaker 1: a little when when set out loud, it's sort of

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Speaker 1: a little embarrassing, I think, because the CFP was arguing

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Speaker 1: that through some statements that Navyans had on their website

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Speaker 1: telling students or bars, if you have trouble with your loans, um,

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Speaker 1: come to us, we can help you. We can um,

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Speaker 1: you know, put you in a good repayment plan. Um.

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Speaker 1: And then they did not do that. They violated not

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Speaker 1: just that duty, but they were being deceptive um in

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Speaker 1: in basically telling students they were help them with that

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Speaker 1: and then actually putting them in what was most helpful

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Speaker 1: to Navy and not to this student. Well, we're gonna

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Speaker 1: have to leave it there. I'm afraid. Thank you for

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Speaker 1: joining us ally amen as at the University of Connecticut

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Speaker 1: School of Law, former founding member of the CFPB,