Navient Corporation, Navient Solutions, Inc. and Pioneer Credit Recovery, Inc.

Documents in this case

• Complaint · Jan. 2017 · 66 p.
• Stipulation · Sept. 2024 · 52 p.

Case summary

On January 18, 2017, the Bureau filed a complaint against Navient Corporation and its subsidiaries, Navient Solutions, LLC (Navient Solutions), and Pioneer Credit Recovery, Inc. (Pioneer). Navient Corporation is a nonbank that owns and services student loans. The Bureau alleged that Navient Solutions and Navient Corporation: (1) engaged in abusive and unfair acts and practices in violation of the Consumer Financial Protection Act of 2010 (CFPA) by steering borrowers experiencing long-term financial hardship into forbearance, a costly option designed for borrowers experiencing short-term financial hardship, instead of adequately advising them about more beneficial income-driven repayment plans; (2) engaged in unfair acts and practices in violation of the CFPA by failing to adequately notify borrowers who enrolled in an income-driven repayment plan about the requirement to annually recertify their income and family size as required under the plan; (3) engaged in deceptive acts and practices in violation of the CFPA by misleading borrowers about the consequences of submitting an incorrect or incomplete application to recertify their income and family size under an income-driven repayment plan; (4) engaged in deceptive acts and practices in violation of the CFPA by misleading private student loan borrowers about requirements to release their co-signer from the loan; (5) engaged in unfair acts and practices under the CFPA by making numerous payment processing errors, including by misallocating and misapplying borrower payments; and (6) violated the Fair Credit Reporting Act’s implementing Regulation V by failing to establish and implement reasonable written policies and procedures to furnish accurate information to credit reporting agencies regarding borrowers who had received a discharge on their federal loans due to a total and permanent disability. The Bureau also alleged that Pioneer and Navient Corporation engaged in deceptive acts and practices in violation of the CFPA and Fair Debt Collection Practices Act by misleading borrowers about the effect of loan rehabilitation on their credit reports and the collection fees that would be forgiven in the federal loan rehabilitation program. On March 24, 2017, Navient moved to dismiss the complaint, which the court denied on August 4, 2017. On July 10, 2020, Navient filed a motion for judgment on the pleadings, which the court denied on January 13, 2021. On September 12, 2024, the court entered a stipulated judgment and order, which requires defendants to pay $100 million in consumer redress and a $20 million penalty. The order also, among other requirements, permanently bans Navient from servicing Direct Loans, prohibits Navient from conducting consumer-facing servicing activities for Federal Family Education Loan Program (FFELP) loans, and permanently bans Navient from acquiring additional FFELP loans.

Complaint (Jan. 2017)

PDF of this document (66 pages)

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IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

Consumer Financial Protection Bureau,

Plaintiff,

v.

Navient Corporation; Navient Solutions, Inc.; and Pioneer Credit Recovery, Inc., Defendants.

Case No. ______________

(Electronically Filed)

COMPLAINT FOR PERMANENT INJUNCTION AND OTHER RELIEF

Plaintiff Consumer Financial Protection Bureau (Bureau) brings this action against Navient Corporation, Navient Solutions, Inc. (Navient), and Pioneer Credit Recovery, Inc. (Pioneer) (collectively, Defendants) and alleges the following:

INTRODUCTION 1.

The Bureau brings this action under the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531, 5536(a), 5564, 5565; the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., and its implementing regulation, Regulation V, 12 C.F.R. part 1022; and the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq., based on Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 1 of 66

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unlawful acts and practices in connection with Defendants’ servicing and collection of student loans. The Bureau seeks to obtain permanent injunctive relief, restitution, refunds, damages, civil money penalties, and other relief for Defendants’ violations of Federal consumer financial laws. 2.

Navient, formerly known as Sallie Mae, Inc., is the largest student loan servicer in the United States. Navient services the loans of more than 12 million borrowers, including over 6 million customer accounts under a contract with the U.S. Department of Education, and more than $300 billion in federal and private student loans. 3.

Navient’s principal responsibilities as a servicer include managing borrowers’ accounts; processing monthly payments; assisting borrowers to learn about, enroll in, and remain in alternative repayment plans; and communicating directly with borrowers about the repayment of their loans.

4.

Navient has failed to perform its core duties in the servicing of student loans, violating Federal consumer financial laws as well as the trust that borrowers placed in the company. Most federal student borrowers have a right under federal law to set their monthly student loan payment as a share of their income, an arrangement that can offer borrowers extended Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 2 of 66

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payment relief and other significant benefits. Navient systematically deterred numerous borrowers from obtaining access to some or all of the benefits and protections associated with these plans. Despite assuring borrowers that it would help them find the right repayment option for their circumstances, Navient steered these borrowers experiencing financial hardship that was not short-term or temporary into costly payment relief designed for borrowers experiencing short-term financial problems, before or instead of affordable long-term repayment options that were more beneficial to them in light of their financial situation. 5.

For borrowers who did enroll in long-term repayment plans, Navient failed to disclose the annual deadline to renew those plans, misrepresented the consequences of non-renewal, and obscured its renewal notice to borrowers who were due for renewal. As a result, the affordable payment amount expired for hundreds of thousands of borrowers, resulting in an immediate increase in their monthly payment and other financial harm.

6.

Taken together, these practices prevented some of the most financially vulnerable borrowers from securing some or all of the benefits of plans that were intended to ease the burden of unaffordable student debt. Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 3 of 66

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7.

Navient’s servicing failures, however, were not just limited to enrolling and renewing borrowers in affordable repayment plans. Navient also misreported information to consumer reporting agencies about thousands of borrowers who were totally and permanently disabled, including veterans whose total and permanent disability was connected to their military service, by making it appear as if those borrowers had defaulted on their student loans when they had not, damaging their credit; misrepresented one of its requirements for borrowers to release their cosigner from their private student loan, thereby denying or delaying access to an important feature on many cosigned private loans that relieves a cosigner of responsibility for the loan once the borrower meets certain eligibility criteria; and repeated the same errors in processing federal and private student loan borrowers’ payments month after month, even after borrowers complained to Navient about those errors. 8.

Since at least July 2011, tens of thousands of borrowers and cosigners have filed complaints with Navient, the Bureau, other governmental and regulatory agencies, and other entities about the difficulties and obstacles they have faced in the repayment of their federal and private student loans serviced by Navient. Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 4 of 66

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9.

Pioneer is a large debt collector that primarily collects or has collected defaulted federal student loan debt on behalf of the U.S. Department of Education and several state-based loan guaranty agencies. 10.

The U.S. Department of Education and state-based guaranty agencies have collectively referred billions in defaulted student loan balances to Pioneer for collection.

11.

Much of Pioneer’s work relates to the federal loan rehabilitation program, which is a program that allows federal student loan borrowers who are in default to effectively “cure” one or more defaulted federal loans. 12.

In seeking to enroll consumers in the rehabilitation program, Pioneer systematically misled consumers about the effect of rehabilitation on the consumer’s credit report and overpromised the amount of collection fees that would be forgiven by enrolling in the program. JURISDICTION AND VENUE 13.

This Court has subject-matter jurisdiction over this action because it is “brought under Federal consumer financial law,” 12 U.S.C. § 5565(a)(1), presents a federal question, 28 U.S.C. § 1331, and is brought by an agency of the United States, 28 U.S.C. § 1345. 14.

Venue is proper in this district because Defendants are located, Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 5 of 66

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reside, and/or do business in this district, and/or a substantial part of the events or omissions giving rise to the claims occurred in this district. 28 U.S.C. § 1391(b), (c); 12 U.S.C. § 5564(f). PLAINTIFF 15.

The Bureau is an independent agency of the United States charged with regulating the offering and provision of consumer financial products and services under Federal consumer financial laws, including the CFPA, the FCRA, and the FDCPA. 12 U.S.C. §§ 5481(12), (14); 5491(a); 5531(a). The Bureau has independent litigating authority to enforce Federal consumer financial laws. 12 U.S.C. §§ 5564(a), (b); 15 U.S.C. § 1681s(b)(1)(H); 15 U.S.C. § 1692l(b)(6).

DEFENDANTS 16.

Formerly known as Sallie Mae, Inc., defendant Navient Solutions, Inc., a wholly-owned subsidiary of Navient Corporation, is a Delaware corporation. Navient Solutions, Inc. principally engages in servicing of federal and private student loans for more than 12 million borrowers. At all times material to this complaint, Navient Solutions, Inc. has offered or provided a “consumer financial product or service,” and therefore is and was a “covered person” under the CFPA. 12 U.S.C. § Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 6 of 66

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5481(6), (15)(A)(i). At all times material to this complaint, Navient Solutions, Inc. has been located and transacted business in this district. 17.

Defendant Pioneer Credit Recovery, Inc., a wholly-owned subsidiary of Navient Corporation, is a Delaware corporation. Pioneer principally engages in debt collection activities related to outstanding and delinquent student loans on behalf of several owners of federal student loans. Pioneer is a “debt collector” under the FDCPA. 15 U.S.C. § 1692a(6). At all times material to this complaint, Pioneer has offered or provided a “consumer financial product or service,” and therefore is and was a “covered person” under the CFPA. 12 U.S.C. § 5481(6), (15)(A)(x). At all times material to this complaint, Pioneer has transacted business in this district.

18.

Defendant Navient Corporation is a loan management, servicing, and asset recovery company and is a Delaware corporation. Navient Corporation is the direct or indirect owner of all of the stock of Navient Solutions, Inc. and Pioneer. At all times material to this complaint, Navient Corporation has been located and transacted business in this district, whether directly or through its subsidiaries. 19.

At all times material to this complaint, Navient Corporation is Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 7 of 66

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and was a “related person” because it has been a “shareholder … or other person … who materially participates in the conduct of the affairs” of Navient Solutions, Inc. and Pioneer, which are covered persons. 12 U.S.C. § 5481(25)(C)(ii). Accordingly, at all times material to this complaint, Navient Corporation is “deemed to [be] a covered person for all purposes of Federal consumer financial law.” 12 U.S.C. § 5481(25)(B). 20.

There has been significant overlap between the corporate governance and management of Navient Corporation and Navient Solutions, Inc., as well as between Navient Corporation and Pioneer. Specifically, many of the directors and officers of Navient Solutions, Inc. have also been directors or officers of Navient Corporation, and many of the directors and officers of Pioneer are also directors or officers of Navient Corporation. For example, as of 2014, John Remondi served as President and Chief Executive Officer for both Navient Corporation and Navient Solutions, Inc.; John Kane served as Chief Operating Officer for both Navient Corporation and Navient Solutions, Inc.; Somsak Chivavibul served as Chief Financial Officer for both Navient Corporation and Navient Solutions, Inc.; Timothy Hynes served as Chief Risk Officer for both Navient Corporation and Navient Solutions, Inc.; and Stephen O’Connell Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 8 of 66

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served as Senior Vice President and Treasurer for both Navient Corporation and Navient Solutions, Inc. Similarly, Jack Frazier, the current Director and former President of Pioneer, also serves as Senior Vice President for Navient Corporation, and Jeff Mersmann, the current President of Pioneer, also serves as Vice President of Operations for Navient Corporation. 21.

Following a corporate reorganization in 2014, Navient Corporation was the successor to SLM Corporation and Navient, LLC. As part of this reorganization, Navient Corporation assumed certain liabilities related to the servicing and collection activities of SLM Corporation, Navient, LLC, and their subsidiaries, including Pioneer. Among the liabilities assumed by Navient Corporation are all of the pre-reorganization servicing and collection conduct described in this Complaint. 22.

SLM Corporation was awarded the servicing contract with the U.S. Department of Education in 2009, and that contract continues to be in force to the present (subject to various modifications that the parties to that contract have executed). All documents related to that contract were signed in the name of SLM Corporation or, subsequently, Navient, LLC. Accordingly, as a result of the 2014 corporate reorganization, Navient Corporation is currently the entity that contracts with the U.S. Department Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 9 of 66

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of Education for the servicing of federal student loans. 23.

In public statements, including annual 10-K filings with the U.S. Securities and Exchange Commission, Navient Corporation (including its predecessor SLM Corporation) has boasted about its capabilities with respect to student loan servicing and collection, including helping consumers navigate the path to financial success and select the appropriate payment plan for their circumstances. Navient Corporation has also indicated that it is responsible for overseeing the strategic direction and business goals of its subsidiaries. For instance, Navient Corporation’s 2015 10-K filing includes the following statements: • “Navient [Corporation] is the nation’s leading loan management, servicing and asset recovery company, committed to helping customers navigate the path to financial success. Servicing more than $300 billion in education loans, Navient [Corporation] supports the educational and economic achievements of more than 12 million customers.”

• “Navient [Corporation] services loans for more than 12 million … customers, including 6.3 million customers whose accounts are serviced under Navient [Corporation]’s contract with ED. We help our customers navigate the path to financial success through proactive outreach and emphasis on identifying the payment plan that best fits their individual budgets and financial goals.”

• “The Navient [Corporation] board of directors and its standing committees oversee our strategic direction, including setting our risk management philosophy, tolerance and parameters; Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 10 of 66

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and establishing procedures for assessing the risks our businesses face as well as the risk management practices our management team develops and implements.”

• “Each business area within our organization is primarily responsible for managing its specific risks following processes and procedures developed in collaboration with our executive management team and internal risk management partners.”

24.

Navient Corporation also owns or leases the offices used by Navient Solutions, Inc. and Pioneer; has responsibility for the hiring of employees for Navient Solutions, Inc. and Pioneer; and manages all compliance auditing for Navient Solutions, Inc. and Pioneer. 25.

Navient Corporation consented to, has knowledge of, has materially participated in, and/or has controlled the activities of Navient Solutions, Inc. and Pioneer with respect to the conduct alleged in this Complaint.

FACTUAL ALLEGATIONS Navient Solutions, Inc.

Navient’s Steering of Borrowers Experiencing Long-Term Financial Hardship into Forbearance

26.

Upon first entering repayment, a federal student loan borrower is assigned to or selects a specific repayment plan. However, that borrower has the right to change his/her repayment plan assignment or selection at Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 11 of 66

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any time, including if the borrower is experiencing financial hardship or distress.

27.

The U.S. Department of Education offers numerous repayment plans to eligible borrowers with federal student loans, which are designed to help borrowers manage their student loan debt and make monthly repayment of these loans more affordable. These repayment plans include several income-driven repayment plans, such as Income-Based Repayment (IBR) and Pay As You Earn Repayment (PAYE). 28.

Most federal student loans are eligible for at least one incomedriven repayment plan.

29.

The monthly amount that the borrower will pay under the income-driven repayment plans is set at an amount that is intended to be more affordable based on the borrower’s income and family size. 30.

Depending on the borrower’s income and family size, a borrower’s monthly payment may be as low as $0 per month when enrolled in an income-driven repayment plan.

31.

In addition to providing a more affordable monthly payment, most income-driven repayment plans offer several other benefits for federal student loan borrowers, especially borrowers experiencing long-term Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 12 of 66

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financial hardship. For example, for borrowers with subsidized loans whose monthly payment amount does not fully cover accrued interest, the federal government will pay any remaining unpaid interest that accrues on those loans during the first three consecutive years of enrollment in the plan. This interest subsidy can be a significant benefit to such borrowers because they generally have no obligation to ever pay the remaining unpaid interest that accrues during those three years. Furthermore, because that unpaid interest is paid in full by the federal government, it is not added to the principal balance of the loan. When interest is not paid, it can be added to the principal balance of the loan; additional interest is then charged on the increased principal balance of the loan, which could significantly increase the total amount repaid over the life of the loan. Thus, the interest subsidy available to many borrowers enrolled in income-driven repayment plans can reduce these additional harmful effects, mitigating the financial strain on those borrowers.

32.

Another benefit available to borrowers who are enrolled in an income-driven repayment plan is forgiveness of the remaining balance of their federal loan, either after making 20-25 years of qualifying payments for most income-driven repayment plans or 10 years of qualifying payments Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 13 of 66

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while working full time for certain public service employers. 33.

Federal student loans are generally also eligible for forbearance, which is a short-term, temporary postponement of payment. With forbearance, a borrower experiencing financial hardship or illness may be able to stop making payments or reduce his or her monthly payment for a defined period of time.

34.

Navient’s website states that forbearance is appropriate for borrowers who “have a problem making on-time payments due to a temporary financial difficulty.” The website also states: “Forbearance is intended to help you out in times of temporary need.”1 35.

Forbearance is typically not suitable for borrowers experiencing financial hardship or distress that is not temporary or short-term. Borrowers who enroll in forbearance face significant costs, which generally increase the longer the borrower is in forbearance. These include the accumulation of unpaid interest and the addition of that unpaid interest to the principal balance of the loan. In addition, in some cases, following a forbearance, a loan may be reamortized, where the monthly payments may

1 Navient, Deferment and Forbearance, https://www.navient.com/loancustomers/postponing-payments/deferment-and-forbearance/ (last visited Jan. 18, 2017).

Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 14 of 66

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be recalculated, which can lead to an increase in the borrower’s monthly payment amount. As a result of these costs, long-term enrollment in forbearance can dramatically increase the total amount due each month after the forbearance period ends and over the repayment term for a borrower’s federal loans.

36.

Because income-driven repayment plans enable borrowers to avoid or reduce these costs associated with forbearance, for borrowers whose financial hardship is not temporary and short-term, enrolling in an income-driven repayment plan is usually a significantly better option than forbearance.

37.

The U.S. Department of Education has publicly encouraged borrowers to consult their federal student loan servicer to determine the best repayment option or alternative for that individual borrower. In several places on its website, the U.S. Department of Education has advised borrowers to contact their student loan servicer before applying for any alternative repayment plan or forbearance, with statements such as the following: “Work with your loan servicer to choose a federal student loan Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 15 of 66

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repayment plan that’s best for you”;2 “Before you apply for an incomedriven repayment plan, contact your loan servicer if you have any questions. Your loan servicer will help you decide whether one of these plans is right for you”;3 and “Always contact your loan servicer immediately if you are having trouble making your student loan payment.”4 38.

Likewise, Navient, as a servicer of federal loans, has repeatedly encouraged borrowers experiencing financial hardship to contact Navient for assistance in evaluating the various alternative repayment options. For example, Navient’s website has included the following statements inviting borrowers to contact Navient for guidance in finding long-term repayment solutions:

• “[I]f you’re having trouble, there are options for assistance, including income-driven repayment plans, deferment, forbearance, and solutions to help you avoid delinquency and prevent default …. We can work with you to help you get back on track, and are sometimes able to offer new or temporarily reduced payment schedules. Contact us at 800-

2 Federal Student Aid, U.S. Department of Education, Repayment Plans, https://studentaid.ed.gov/sa/repay-loans/understand/plans (last visited Jan. 18, 2017). 3 Federal Student Aid, U.S. Department of Education, Income-Driven Repayment Plans, https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven (last visited Jan. 18, 2017).

4 Federal Student Aid, U.S. Department of Education, Deferment and Forbearance, https://studentaid.ed.gov/sa/repay-loans/deferment-forbearance (last visited Jan. 18, 2017).

Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 16 of 66

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722-1300 and let us help you make the right decision for your situation.”5

• “If you’re experiencing problems making your loans payments, please contact us. Our representatives can help you by identifying options and solutions, so you can make the right decision for your situation.”6

• “Navient is here to help. We’ve found that, 9 times out of 10, when we can talk to a struggling federal loan customer we can help him or her get on an affordable payment plan and avoid default.”7

39.

For many years, Navient’s website has included other, similar statements. For example, its website previously stated that it was “committed to giving you the information and tools you need to understand and evaluate your student loan payment options. We can help you find an option that fits your budget, simplifies payment, and minimizes your total interest cost.” (emphasis added).

40.

Nevertheless, since at least July 2011, despite publicly assuring borrowers that it will help them identify and enroll in an appropriate,

5 Navient, If You’re Having Trouble, https://www.navient.com/loancustomers/postponing-payments/if-you-are-having-trouble/ (last visited Jan. 18, 2017) (emphasis added).

6 Navient, Avoiding Delinquency and Default, https://www.navient.com/loancustomers/postponing-payments/avoiding-default/ (last visited Jan. 18, 2017) (emphasis added).

7 Navient, 5 Habits of Successful Borrowers, https://www.navient.com/loancustomers/getting-started/successful-student-loan-borrowers/ (last visited Jan. 18, 2017) (emphasis added).

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affordable repayment plan, Navient has routinely disregarded that commitment and instead steered borrowers experiencing long-term distress or hardship into forbearance.

41.

Navient’s compensation policies for its customer service representatives have incentivized them to push numerous borrowers to forbearance without adequately exploring income-driven repayment plans with those borrowers, and in some cases, without even mentioning incomedriven repayment plans at all.

42.

Because of the number and complexity of repayment options available for federal loans, a conversation about alternative repayment plans and the borrower’s financial situation is usually time-consuming. 43.

Navient, however, has compensated its customer service personnel, in part, based on average call time. As a result, engaging in lengthy and detailed conversations with borrowers about their particular financial situation and trying to determine the income-driven repayment plan that is most appropriate for each borrower would have been financially detrimental for those employees.

44.

Moreover, since a borrower is required to submit a paper or online application, and include certain income tax documentation with that Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 18 of 66

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application, to enroll in an income-driven repayment plan, the process of enrolling a borrower in such plans sometimes requires multiple, lengthy conversations with the borrower. This is especially true considering that more than half of Navient borrowers who enroll in income-driven repayment plans for the first time report that they could not navigate the application process on their own.

45.

In addition to the paperwork required to enroll a borrower in an income-driven repayment plan, a borrower in such a plan must also complete an annual recertification form each year to document his/her current income and family size, which is then used to adjust the borrower’s payment amount. Processing this renewal paperwork further increases the employee time that Navient must devote to borrowers who enroll in an income-driven repayment plan.

46.

As the volume of income-driven repayment plan applications and renewals received by Navient increases, Navient also has to increase the size of its staff to review and process those forms, thereby increasing operating costs.

47.

In sum, counseling borrowers about and enrolling those borrowers in income-driven repayment plans is costly for Navient and its Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 19 of 66

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employees.

48.

In contrast, enrollment in forbearance can often be completed over the phone, in a matter of minutes, and generally without the submission of any paperwork.

49.

As compared to the staff resources and time expenditure required to enroll and renew borrowers in income-driven repayment plans, enrolling borrowers in forbearance is substantially less expensive for Navient and is or was financially beneficial for its employees. Navient employees have routinely failed to invest the time and effort necessary to help financially distressed borrowers identify and enroll in affordable repayment plans most appropriate for their financial situation. 50.

Between January 2010 and March 2015, the number of borrowers that Navient enrolled in forbearance has generally exceeded the number of borrowers enrolled in income-driven repayment plans. For example, in December 2010, around 9% of borrowers with Federal Family Education Loan (FFEL) loans held and serviced by Navient were enrolled in voluntary forbearance, while less than 1% of borrowers with the same loan type were enrolled in IBR. Similarly, in December 2012, approximately 7% of Navient borrowers with FFEL loans held and serviced by Navient were Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 20 of 66

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enrolled in voluntary forbearance, while just 2% of borrowers with the same loan type were enrolled in IBR.

51.

Navient representatives sometimes initially responded to borrowers’ inability to make a payment by placing them in voluntary forbearance without adequately advising them about available incomedriven repayment plans. This occurred even though it is likely that a large number of those borrowers would have qualified instead for a $0 payment in an income-driven repayment plan at that time. Indeed, over 50% of Navient borrowers who need payment relief, and meet the eligibility criteria for income-driven repayment plans, qualify for a $0 monthly payment. 52.

For example, between January 1, 2010 and March 31, 2015, nearly 25% of borrowers who ultimately enrolled in IBR with a $0 payment were enrolled in voluntary forbearance within the twelve-month period immediately preceding their enrollment in IBR. Similarly, during that same time period, nearly 16% of borrowers who ultimately enrolled in PAYE with a $0 payment were enrolled in voluntary forbearance within the twelvemonth period immediately preceding their enrollment in PAYE. The majority of these borrowers were enrolled in voluntary forbearance more than three months prior to their enrollment in the income-driven Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 21 of 66

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repayment plan, which suggests that forbearance was not merely offered to these borrowers while their application in an income-driven repayment plan was pending. Because they were placed into forbearance before ultimately enrolling in an income-driven repayment plan with a $0 payment, these borrowers had delayed access to the benefits of the incomedriven repayment plan. They were also subject to the negative consequences of forbearance, including the addition of interest to the principal balance of the loan, which they potentially could have avoided had they been enrolled in the income-driven repayment plan from the start. 53.

Navient also enrolled an immense number of borrowers in multiple consecutive forbearances, even though they had clearly demonstrated a long-term inability to repay their loans. For example, between January 1, 2010 and March 31, 2015, Navient enrolled over 1.5 million borrowers in two or more consecutive forbearances totaling twelve months or longer. More than 470,000 of these borrowers were enrolled in three consecutive forbearances, and more than 520,000 of them were enrolled in four or more consecutive forbearances. For borrowers enrolled in three or more consecutive forbearances, each forbearance period lasted, on average, six months. Therefore, hundreds of thousands of consumers Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 22 of 66

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were continuously enrolled in forbearance for a period of two or three years, or more. Regardless of why these borrowers did not enroll in an income-driven repayment plan from the start, their long-term inability to repay was increasingly clear as each forbearance period expired. Yet Navient representatives continued to enroll them in forbearance again and again, rather than an income-driven repayment plan that would have been beneficial for many of them.

54.

Enrollment in multiple consecutive forbearances imposed a staggering financial cost on this group of borrowers. At the conclusion of those forbearances, Navient had added nearly four billion dollars of unpaid interest to the principal balance of their loans. For many of these borrowers, had they been enrolled in an income-driven repayment plan, they would have avoided much or all of their additional charges because the government would have paid the unpaid interest on their subsidized loans in full during the first three years of consecutive enrollment. Navient’s Servicing Failures Relating to Renewal of Borrowers’ Enrollment in Income-Driven Repayment Plans

55.

A federal student loan borrower who is enrolled in an incomedriven repayment plan must certify his/her income and family size to Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 23 of 66

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qualify for an affordable payment amount that is based on that income and family size. This affordable payment amount applies for a period of twelve months. At the end of this twelve-month period, the affordable payment amount will expire unless the borrower renews his/her enrollment in the plan before the expiration date. To do so, the borrower must “recertify” his/her income and family size by submitting updated information, including documentation of income. The borrower must recertify income and family size information before the expiration of the twelve-month period each year in order to maintain the affordable payment amount each year.

56.

If the twelve-month period expires because the borrower has not timely recertified income and family size, several negative consequences are likely to occur. First, the borrower’s monthly payment amount may immediately increase from a low affordable amount to one that is typically in the hundreds or even thousands of dollars. 57.

Other significant consequences that will occur when the twelvemonth period expires without a timely recertification include (1) the addition of any unpaid, accrued interest to the principal balance of the loan; (2) for subsidized loans in the first three years of enrollment in an Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 24 of 66

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income-driven repayment plan, the loss of an interest subsidy from the federal government for each month until the borrower renews his/her enrollment; and (3) for some borrowers who enroll in forbearance when the twelve-month period expires, delayed progress towards loan forgiveness because the borrower is no longer making qualifying payments that count towards loan forgiveness. These consequences are all irreversible. 58.

At the time of enrollment in the income-driven repayment plan, Navient has sent borrowers an “initial disclosure notice” which identified the beginning and end dates of the initial enrollment in the repayment plan. That notice has also advised consumers: “You’ll be notified in advance when your loan(s) is up for renewal for the [income-driven repayment] plan. At that time, you’ll be provided with a date to submit a new application.” However, the notice has not indicated any specific renewal deadline.

59.

The “initial disclosure notice” has also outlined certain consequences that might result if the borrower “chooses not to renew” or “requests to leave the plan,” including the recalculation of the borrower’s monthly payment amount and the addition of unpaid interest to the principal balance of the loan. This indicates that these consequences will Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 25 of 66

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result only if the borrower either “chooses not to renew” or “requests to leave the plan.” The notice does not identify any consequences that might result if the borrower chooses to renew by submitting a renewal application, but the application is incorrect or incomplete in some respect or is not submitted in a timely manner.

60.

Since at least January 1, 2010, federal student loan servicers, including Navient, have been required to send at least one written notice concerning the annual renewal requirements to borrowers in advance of their renewal deadline.

61.

From at least January 1, 2010 until December 2012, Navient’s annual renewal notices for income-driven repayment plans sent through U.S. mail did not inform borrowers of the actual date by which they had to submit the renewal application, including documentation of income, to avoid expiration of the twelve-month period during which payment was set at an affordable amount based on the borrower’s income and family size. 62.

Instead, Navient’s pre-December 2012 notices stated vaguely that the borrower’s income-based repayment period would “expire in approximately 90 days” and that the “renewal process may take at least 30 days.”

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63.

It is impossible to determine from these two statements the deadline by which a borrower must submit the required documentation and information in order to timely renew enrollment in the plan. First, the statement that the “renewal process may take at least 30 days” says nothing about how long the renewal process will actually take, or even the maximum number of days the renewal process could take. Second, by saying that the plan would expire in “approximately 90 days,” Navient provided no date by which the borrower could count backwards to calculate the deadline – even if Navient had told the borrower how many days to count (which it did not). The notice also failed to advise borrowers of the likely consequences if they failed to timely submit their renewal application.

64.

The pre-December 2012 notices also failed to advise borrowers of the likely consequences of submitting incorrect or incomplete information. The notices encouraged borrowers to fill out the forms completely and warned borrowers that “by providing incorrect or incomplete information the [renewal] process will be delayed.” This falsely implied that the only consequence of providing incorrect or incomplete information was a “delay” in the renewal “process” – that while the renewal Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 27 of 66

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process would be delayed by the submission of an incomplete and incorrect application for renewal, as long as the deficiencies were rectified, no other consequences would result.

65.

Borrowers who have submitted a renewal application have clearly chosen to renew their enrollment; their choice to renew was evidenced by their submission of the application, even if that application was incomplete or inaccurate in some respect. But the pre-December 2012 notice said nothing to warn these borrowers that failing to submit complete and accurate information before the end of the twelve-month period would have essentially the same consequences as if the borrower chose not to renew their enrollment in the income-driven repayment plan at all, because the consequences of a decision not to renew that were outlined in the initial disclosure letter would still result. Those consequences included at least a temporary increase in the borrower’s monthly payment amount, the addition of any unpaid interest to the principal balance of the loan, and other financial consequences described above. Borrowers could not reasonably have been expected to interpret Navient’s reference to a mere processing delay to actually mean irreversible financial harm. 66.

For borrowers who have consented to receiving electronic Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 28 of 66

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communications, Navient has sent electronic renewal notices instead of hard copy notices by mail. More than 75% of Navient’s federal student loan borrowers have consented to receiving electronic communications. 67.

Between at least mid-2010 and March 2015, these borrowers had to log in to Navient’s secure website with their user ID and password to view an electronic version of the renewal notice sent via U.S. mail to other borrowers. Navient, however, failed to adequately advise these borrowers of the availability of the electronic notice on its website. 68.

The only step that Navient took to advise these borrowers of the availability of the electronic notice on its website was to send them an email with a hyperlink to its website, where the renewal notice could be viewed after the borrower logged into his/her secure account. But neither the subject line of this email nor its contents provided any indication of the purpose of the notice.

69.

From at least January 1, 2010 through November 15, 2012, the subject line of the email simply read: “Your Sallie Mae Account Information.” Likewise, from at least November 16, 2012 through March 18, 2015, the subject line of the email was: “New Document Ready to View.” 70.

The body of the email did not provide any greater detail. Until Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 29 of 66

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mid-2015, the body of the email stated only that “a new education loan document is available. Please log in to your account to view it.” 71.

In stark contrast, during the same time period, other emails sent by Navient described the content or purpose of the referenced document. For example, the subject line of one such email was “Your Sallie Mae – Department of Education Statement is Available,” and the body of the email stated “Your monthly statement is now available. Please log in to your account at SallieMae.com to view and pay your bill.” Another email regarding loan terms had a subject line that read “Change in Loan Terms,” and the text of this email stated, “The payment term for your loan(s) has changed. Please log in to your account to view the document with your updated payment schedule.”

72.

Navient has tracked the number of borrowers who click on the hyperlink in the emails that Navient sends to them. Thus, Navient has known or should have known that many borrowers did not view the electronic renewal notices.

73.

Between at least July 2011 and March 2015, the percentage of borrowers who did not timely renew their enrollment in income-driven repayment plans regularly exceeded 60%. Those borrowers who did not Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 30 of 66

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timely renew experienced the significant consequences of nonrenewal, including a payment jump and the addition of any accrued, unpaid interest to the principal balance of the loan.

74.

Navient has been aware that the majority of borrowers were failing to renew their enrollment in income-driven repayment plans. 75.

Beginning in or around March 2015, Navient made several enhancements to its email that provides access to the electronic renewal notice. It changed the subject line of the email to read “Your Payment Will Increase Soon!” and the text of the email now states: “[I]n order to keep your lower payment amount, it’s important that you apply soon to renew your repayment plan.”

76.

Since Navient made these enhancements to its electronic notices, the renewal rate has more than doubled. Navient’s Misreporting of Information to Consumer Reporting Agencies Regarding Loans Held by Disabled Borrowers

77.

As a servicer of student loans, Navient routinely furnishes information about its student loan accounts to consumer reporting agencies.

78.

The U.S. Department of Education allows borrowers who have a Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 31 of 66

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total and permanent disability to have their federal loans discharged, relieving them of any obligation to pay the loans. These include loans held by veterans whom the U.S. Department of Veterans Affairs has determined are unemployable because of disabilities connected to their military service. 79.

In 2006, the U.S. Department of Education provided guidance regarding appropriate credit reporting when a loan is discharged. That guidance instructs that, when a non-defaulted loan is discharged due to the total and permanent disability of the borrower, servicers should use only reporting code “05” and a payment rating code applicable to the status of the loan. Those instructions also indicate that the reporting code “AL” (signaling that the loan is being “assigned to the government”) is to be used only: (1) by schools holding Perkins loans, not by servicers, and (2) only when the loan is in a default status prior to being discharged due to the disability of the borrower.

80.

Consistent with the instructions from the U.S. Department of Education, the operative credit reporting guide, issued by the Consumer Data Industry Association in 2012, contains a section on “Total and Permanent Disability Discharge Procedures” for student loans. That section indicates that the reporting code “AL” is to be used only: (1) by schools Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 32 of 66

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holding Perkins loans, not by servicers, and (2) only when the loan is in a default status prior to being discharged due to the disability of the borrower.

81.

From at least October 2012 until approximately June 2014, Navient used the “AL” reporting code to report a loan that had been discharged due to the borrower’s total and permanent disability, despite the fact that Navient is not an educational institution that holds Perkins loans, and that some of the borrowers who received a loan discharge due to a total and permanent disability had not defaulted.

82.

Navient’s furnishing of information regarding loans that had been discharged due to the borrower’s total and permanent disability was not accurate because there was a correct reporting code available to be used by servicers responsible for non-defaulted loans that were being discharged due to a borrower’s total and permanent disability. Navient’s misreporting made it appear as if borrowers who had not defaulted on their loans and whose loans were being discharged due to a total and permanent disability had actually defaulted on their loans.

83.

Navient used a reporting code for defaulted loans even though it knew that doing so was likely to cause a significant negative impact on the Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 33 of 66

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credit report and associated credit score of totally and permanently disabled borrowers, and other serious harm. For example, Navient’s website warns: “Defaulting on your federal or private loans may result in serious consequences that might lead to a long lasting and harmful impact to you as the borrower or cosigner.”8 And Navient’s own debt collectors tell borrowers at risk of default that a default will severely impact their credit score.

Navient’s Misrepresentations Relating to Cosigner Release 84.

A cosigner is generally necessary for a borrower to obtain a private student loan, or to obtain that loan with more favorable terms. 85.

Once a borrower enters repayment on his/her private student loan, he or she generally can apply to release the cosigner from the loan after meeting certain eligibility criteria. This option is generally available to most Navient borrowers with cosigned private student loans. 86.

Since at least January 2010, one of the eligibility criteria that Navient has required private student loan borrowers to meet before they can apply to release a cosigner is that the borrower must make a minimum

8 Navient, Avoiding Delinquency and Default, https://www.navient.com/loancustomers/postponing-payments/avoiding-default/ (last visited Jan. 18, 2017). Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 34 of 66

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number of consecutive, on-time payments consisting of both principal and interest. Since January 21, 2014, Navient has required the borrower to “make 12 consecutive, on-time principal and interest payments” before applying for cosigner release. Prior to January 21, 2014, and depending on the applicable terms of the borrower’s loan, Navient required borrowers to make between 12 and 48 “consecutive, on-time principal and interest payments” before applying for cosigner release. Navient did not, however, specifically define for borrowers what it meant by “consecutive” or “ontime” payments.

87.

A borrower in repayment will sometimes make a payment that is a multiple of the monthly payment amount due. For example, a borrower whose monthly payment amount due is $100 may choose to pay $200 or $300 instead of $100.

88.

When a borrower makes such a “multiplier overpayment,” Navient generally applies the payment to satisfy the borrower’s current monthly payment due, and then places the borrower in a “paid ahead” status for the subsequent months that have been satisfied by the excess payment.

89.

For each month that the borrower is in a “paid ahead” status on Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 35 of 66

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his/her private student loan, Navient sends the borrower a bill indicating that the payment due for that month is $0 because the borrower is not required to make any payment that month in order to remain current on his/her loan. Thus, there is no “on-time principal and interest payment” that is even due that month.

90.

Until at least mid-2015, in determining whether a borrower made the minimum number of “consecutive, on-time principal and interest payments” for purposes of cosigner release, Navient treated the lack of payment by a borrower in response to a $0 bill as a failure to make a “consecutive, on-time principal and interest payment” that month. Navient reset the borrower’s progress towards the “consecutive, on-time principal and interest payments” requirement to zero months. 91.

For example, suppose a borrower’s monthly amount due is $100. If she paid exactly $100 each month from January through September 2014, Navient would have considered her to have made nine consecutive, on-time payments. Suppose she then submitted a $200 payment in October 2014. Because that $200 payment would have been enough to cover the monthly amount due for both October and November 2014, she would have received a $0 bill for November. Because no payment Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 36 of 66

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was required by the $0 bill, she submitted no payment in November. Then, in December 2014, upon receiving the next bill that actually required a payment, she made an on-time monthly payment of $100. Because she did not submit a payment in November 2014, Navient would have reset her progress toward the consecutive, on-time principal and interest payment requirement for cosigner release. Navient would have treated this borrower as having made zero consecutive payments as of November. 92.

This is contrary to Navient’s statement to borrowers that they can apply for cosigner release if they make a certain number of “consecutive, on-time principal and interest payments.” The requirement is only that the “on-time principal and interest payments” must be consecutive – not that the “months” or “billing cycles” in which on-time principal and interest payments are made must be consecutive. The requirement does not even refer to months or billing cycles. 93.

When a borrower does not submit a payment in a particular month because he/she has received a $0 bill as a result of a previous multiplier overpayment, and then makes an on-time principal and interest payment the next time he/she receives a bill for more than $0, there is no break in eligible payments that he/she has made towards the on-time Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 37 of 66

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principal and interest payment requirement. The borrower in the example above made eleven eligible payments in 2014, and they were consecutive because there was no “on-time principal and interest payment” she failed to make that year. Yet Navient would have reset her count to zero months in November 2014 because her payments were not made in consecutive months.

94.

Navient has thus misled borrowers by stating that they must make twelve “consecutive, on-time principal and interest payments” before applying for cosigner release. The actual requirement that Navient applied is that the borrower must submit a separate on-time payment in each of twelve consecutive months amounting to at least the regular principal and interest amount, even where the billing statement indicates that no payment is required.

95.

Navient failed to disclose this actual requirement. And nothing on Navient’s billing statement, its website, or any other consumer-facing document advised borrowers that making no payment in response to a $0 bill could impact their eligibility for cosigner release. 96.

By resetting borrowers’ progress toward the “consecutive, ontime principal and interest payments” requirement to zero months when Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 38 of 66

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they submitted no payment in response to a $0 bill as a result of a previous multiplier overpayment, Navient denied or delayed cosigner release for borrowers who had already satisfied the requirement that Navient had disclosed or had made progress towards doing so, and who had met or would have been able to meet Navient’s other requirements for release. Navient’s Payment Processing Errors 97.

One of Navient’s primary responsibilities as a student loan servicer is to process payments made by borrowers and cosigners on their student loan accounts.

98.

Navient, however, does not have adequate processes and procedures in place to sufficiently address certain errors it makes in the processing of payments received from borrowers and cosigners or to prevent errors from recurring.

99.

A significant number of borrowers and cosigners do not submit payments through Navient’s online portal, but instead submit their payments by mailing a check or through an external bill payment system (such as a bill payment service operated by the bank where the borrower has a checking account).

100. Since at least July 2011, many borrowers and cosigners, Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 39 of 66

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primarily those who pay by mailing a check or through an external bill payment system, have complained that Navient misallocated or misapplied submitted payments. (Errors in the allocation of payments relate to how a payment is distributed across multiple loans. Errors in the application of payments relate to how a payment is applied to a specific loan or loans based on the terms of each loan’s promissory note; for example, the payment might be applied first to unpaid fees, then to unpaid interest, and then to unpaid principal.) 101.

By way of example, in some instances, Navient has misallocated payments intended and/or designated for a specific loan(s) among some or all of a borrower’s other loans. Sometimes, the payment was a lump sum payment intended to pay off a specific loan, but Navient allocated the payment to all of the loans in the borrower’s account, thereby not paying off the loan that the borrower intended to pay off. In other cases, Navient has disregarded borrower or cosigner instructions about how to divide a payment among loans, or incorrectly allocated payments made by cosigners to all of the loans in the borrower’s account instead of only the loans which they cosigned.

102. Each year Navient receives thousands of complaints and Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 40 of 66

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inquiries relating to payment misapplication or misallocation that are escalated beyond a first-level customer service representative. 103. One source for payment processing errors appears to be the undisclosed payment allocation methodology used by Navient. Specifically, when a borrower has more than one loan serviced by Navient, Navient generally places that borrower’s loans in one or more billing groups. For borrowers who made a payment that varied from the exact amount owed on the loans in a billing group, Navient has used a default allocation methodology that was not disclosed on any billing statement, promissory note, or printed or online resource available to borrowers. 104. In addition, the default allocation methodology varied based on whether the loan was federal or private, as well as whether the borrowed submitted an underpayment, overpayment, or an overpayment that was a multiple of the borrower’s monthly payment amount due. 105. Because Navient did not make its default allocation methodologies clear or publicly available until at least late 2013, prior to that time borrowers and cosigners had no way of knowing in advance how Navient might allocate payments (unless they specifically requested the information and a representative provided accurate information). Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 41 of 66

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106. While a borrower or cosigner could submit written instructions with a paper check as to how a payment should be processed, Navient’s mail reading equipment did not always properly detect the presence of such instructions. And even where the instructions were detected and acted upon by a Navient representative, the Navient representative did not always implement the instructions properly.

107. Thus, borrowers who did not use Navient’s online portal to submit payments had to call if they discovered, as was sometimes the case, that their payment processing instructions had not been honored or had not been implemented properly.

108. Errors made by Navient in the processing of payments received from borrowers and cosigners have resulted in borrowers and cosigners incurring improper late fees, increased interest charges, the furnishing of inaccurate negative information to consumer reporting agencies, and the loss of certain benefits.

109. Many borrowers and cosigners have complained that a payment processing error was not an isolated event, but rather that the same payment processing error recurred time and again, even after they contacted Navient to correct the error.

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110.

While Navient might correct a specific error if a consumer contacts Navient to report it, if the error is not escalated beyond a first-level customer service representative, Navient does not necessarily identify and fix the underlying issue causing the error to prevent it from recurring. As a result, some consumers have suffered the same payment processing error in multiple months.

111.

Moreover, Navient does not categorize most non-escalated consumer inquiries about payment processing errors. When borrowers and cosigners with non-escalated consumer inquiries contact Navient about payment processing errors, Navient personnel generally record details about the error in a freeform, narrative style in notes in the consumer’s account, but those personnel are unable to use any codes or tags to categorize the inquiry or concern.

112.

Navient, thus, is unable to systematically search and/or aggregate these non-escalated inquiries. As a result, Navient has been unable to effectively understand many of the problems that consumers are experiencing with respect to payment processing and take action to prevent these problems from recurring or from impacting the same consumer again and again.

Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 43 of 66

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Pioneer Credit Recovery, Inc.

The Federal Rehabilitation Program 113.

The federal loan rehabilitation program allows federal student loan borrowers to restore the student loans on which they have defaulted to active repayment and remove the default notation from their credit histories.

114.

Once a borrower enters the program, he/she is required to make nine on-time payments over the course of ten months. If the borrower successfully makes the nine payments and submits an application, the outstanding loan balance is transferred to a new servicer and the borrower is taken out of default status. 115.

The U.S. Department of Education has relied on Pioneer and other private collection agencies to accurately explain the terms and conditions of the rehabilitation program to borrowers and enroll them in the program where appropriate.

116.

Once Pioneer enrolls a borrower in the rehabilitation program, the company receives a percentage-based fee for every monthly rehabilitation payment made by that borrower. 117.

Once a borrower completes the nine payments and the Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 44 of 66

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rehabilitation application, Pioneer receives a percentage fee based on the total amount of the defaulted loan balance “cured” through rehabilitation. Pioneer’s False Promises that Rehabilitation Would Remove All Adverse Information Regarding the Borrowers’ Loans from Their Credit Reports

118.

When a borrower is in a normal repayment status on her student loan, he/she has a related trade line on his/her credit report. 119.

If that borrower ceases making payments, eventually he/she will enter default status, at which point a new and separate default trade line will be added to his/her credit report. Hence, a borrower in default has two trade lines related to the student loan: one reflecting the late payments and delinquencies leading up to default, and another reflecting the default itself.

120. Once a borrower completes the rehabilitation program and has the default cured, the owner of the loan removes the default trade line from the borrower’s credit report. However, the original trade line reflecting late payments and delinquencies prior to the default is not removed. 121.

The U.S. Department of Education instructs its debt collectors not to state or imply to borrowers that the adverse information reported by the original lender guaranty agency will be removed from the borrower’s Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 45 of 66

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credit report as a result of rehabilitation: “Adverse information reported by the original lender will not be expunged or excluded from credit reports before the 7-year period that runs from the lender’s report of that default, even if the loan is rehabilitated.”

122. On information and belief, despite this instruction, in calls with borrowers, Pioneer collectors routinely misrepresented the change that occurs on a borrower’s credit report after rehabilitation, by stating or suggesting that all adverse information relating to the defaulted loan, including any record of late payments and delinquencies, would be removed from the borrower’s credit report. Borrowers typically do not know that there are two trade lines for the defaulted loans, so unless that fact is clearly explained to the borrower, they would not reasonably understand that not all adverse information would be removed. 123. The U.S. Department of Education, in 2015, announced its intention to end its contract with Pioneer in part because an audit, which included review of a sample of calls, indicated that Pioneer collectors misled consumers concerning the change that occurs on a borrower’s credit report after rehabilitation.

124. On information and belief, the misrepresentations made in calls Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 46 of 66

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with borrowers were also consistent with the training guides used by Pioneer which included the following talking points: “You have qualified for a rehabilitation program. What you will need to do is make a minimum of 9 qualifying monthly payments. After all payments are made, a new lender will pay off the Department of Education for you. You will then in turn owe the new lender, which means you will no longer be in Federal Default. All of the collection fees will be removed at the time of the sale. Also it will be completely deleted from your credit report as though it never happened.” (emphasis added).

125. In fact, after rehabilitation, these borrowers’ trade lines were not erased of all adverse information related to the student loan. The original trade line, reflecting a delinquency, remained on their credit reports.

Pioneer’s False Promises Regarding Collection Fee Forgiveness 126. When a federal student loan enters default, the U.S. Department of Education begins calculating collection fees at 24.34% of the principal amount due.

127.

The amount calculated becomes part of the overall balance owed to the federal government by the borrower. Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 47 of 66

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128. Once a borrower completes the rehabilitation program, and the default is cured, any remaining collection fees are forgiven by the U.S. Department of Education.

129. On information and belief, in calls with some borrowers, Pioneer collectors represented that all collection fees would be forgiven. 130. On information and belief, other times, Pioneer represented to some borrowers that the amount of collection fees currently assessed to the account would be forgiven.

131.

In reality, since 20% of each rehabilitation payment made by a borrower goes towards collection fees, many borrowers have paid down a significant portion of their collection fees by the time they have completed the rehabilitation program.

132. As a result, by the time the borrower has finished the rehabilitation program, the amount of collection fees remaining to be forgiven was less than initially promised.

133. The U.S. Department of Education, in 2015, announced its intention to end its contract with Pioneer in part because an audit, which included review of a sample of calls, indicated that Pioneer collectors misled consumers concerning the amount of collection fees that would be Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 48 of 66

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forgiven for borrowers who completed the rehabilitation program. VIOLATIONS OF THE CONSUMER FINANCIAL PROTECTION ACT 134. Sections 1031 and 1036 of the CFPA prohibit a “covered person” from committing or engaging in any “unfair, deceptive or abusive act or practice” in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service. 12 U.S.C. §§ 5531(a), 5536(a)(1)(B). Defendants are “covered person[s]” within the meaning of the CFPA. 12 U.S.C. § 5481(6).

135.

An act or practice is unfair if it causes or is likely to cause substantial injury to consumers, which is not reasonably avoidable by consumers, and such substantial injury is not outweighed by countervailing benefits to consumers or to competition. 12 U.S.C. § 5531(c). 136. An act or practice is deceptive if it misleads or is likely to mislead the consumer; the consumer’s interpretation of the act or practice is reasonable under the circumstances; and the misleading act or practice is material.

137.

An act or practice is abusive if it, among other things, takes Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 49 of 66

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unreasonable advantage of the reasonable reliance by the consumer on a covered person to act in the interests of the consumer. 12 U.S.C. § 5531(d). Count I Abusive Acts or Practices Related to Steering (Against Navient and Navient Corporation) 138. The allegations in Paragraphs 1 to 137 are incorporated here by reference.

139. Federal student loan borrowers relied on Navient to act in their interests in advising about options to address their financial situation, including helping borrowers experiencing financial hardship or distress select a suitable alternative repayment plan. That reliance was reasonable in part because both Navient and the U.S. Department of Education repeatedly encouraged borrowers to rely on their servicer to help them in this way.

140. As described above, in numerous instances, Navient took unreasonable advantage of consumers’ reasonable reliance on Navient to act in their interests. Navient did not act in consumers’ interest because it steered borrowers experiencing long-term financial hardship to forbearance rather than adequately advising them about income-driven Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 50 of 66

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repayment plans that would have been financially beneficial to those borrowers.

141.

This advantage obtained by Navient was unreasonable because Navient benefited from this conduct at the expense of the consumer. Enrolling borrowers into forbearance is quicker and less expensive to administer than other repayment plans, thus decreasing Navient’s operating costs. The advantage obtained by Navient was also unreasonable because Navient fostered the reliance that it then exploited at the expense of those consumers.

142. Therefore, Navient’s acts and practices as set forth herein, together with or on behalf of Navient Corporation, constitute abusive acts or practices in violations of sections 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1).

Count II Unfair Acts or Practices Related to Steering (Against Navient and Navient Corporation) 143. The allegations in Paragraphs 1 to 137 are incorporated here by reference.

144. Navient’s acts and practice relating to steering of borrowers into Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 51 of 66

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forbearance caused or was likely to cause substantial consumer injury. Navient steered hundreds of thousands of federal student loan borrowers experiencing long-term financial hardship into multiple consecutive forbearances that spanned years. Navient then added any interest that was unpaid during the forbearance period to the principal balance of these borrowers’ loans, thereby drastically increasing the total costs of these loans.

145. This consumer injury was not reasonably avoidable because Navient steered borrowers into forbearance while providing no or inadequate information about alternative repayment plans so that borrowers could make an informed decision to select the repayment option that was most appropriate for their financial circumstances. 146. The substantial consumer injury caused or likely caused by Navient’s steering of borrowers into forbearance was not outweighed by countervailing benefits to consumers or to competition. 147.

Therefore, Navient’s acts and practices as set forth herein, together with or on behalf of Navient Corporation, constitute unfair acts or practices in violations of sections 1031 and 1036 of the CFPA. 12 U.S.C. §§ 5531, 5536(a)(1).

Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 52 of 66

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Count III Unfair Acts or Practices Related to Recertification (Against Navient and Navient Corporation) 148. The allegations in Paragraphs 1 to 137 are incorporated here by reference.

149. As described above, Navient failed to adequately notify borrowers who consented to receive electronic communications of the existence of the renewal notice because the email it sent to them that purportedly provided such notice included no information about the purpose or contents of the notice in the subject line or body of the email. 150. These acts and practices caused or were likely to cause substantial injury to consumers because numerous federal student loan borrowers’ affordable income-based payment in the income-driven repayment plan expired as a result of those acts or practices, causing them to suffer significant negative financial consequences, including an increased monthly payment, the addition of interest to the principal balance of the loan, and the partial loss of the interest subsidy provided by the federal government for eligible loans. Navient was aware that the majority of its federal student borrowers were failing to timely renew their enrollment in Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 53 of 66

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income-driven repayment plans.

151.

These injuries were not reasonably avoidable. Among other things, Navient’s acts and practices relating to renewal of income-driven repayment plans created an unreasonable obstacle to the exercise of consumers’ decision-making with respect to renewal of income-driven recertification plans, including by obscuring access to the information necessary for consumers to take the actions necessary to avoid these injuries.

152. The substantial consumer injury caused or likely caused by Navient’s acts and practices relating to renewal of income-driven repayment plans was not outweighed by countervailing benefits to consumers or to competition.

153.

Therefore, Navient’s acts and practices as set forth herein, together with or on behalf of Navient Corporation, constitute unfair acts or practices in violations of sections 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1).

Count IV Deceptive Acts or Practices Related to Recertification (Against Navient and Navient Corporation) Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 54 of 66

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154. The allegations in Paragraph 1 to 137 are incorporated here by reference.

155.

From at least July 2011 to December 2012, in numerous instances, Navient sent federal student loan borrowers a notice regarding renewal of income-driven repayment plans that stated that providing incomplete or inaccurate information in the renewal application would result in a “delay” in the renewal “process,” but Navient did not separately identify any consequences other than the processing delay. This statement made an implied representation, and created the false impression, that the only consequence of submitting a renewal application with incomplete or inaccurate information would be a processing delay and nothing more. 156. In truth and in fact, submitting a renewal application with incomplete or inaccurate information was likely to result in several other consequences, which were more severe than a mere delay in processing the renewal. These include a significant increase in the borrower’s monthly payment amount, the addition of any unpaid interest to the principal balance of the loan, and the partial loss of the federal government’s interest subsidy for eligible loans.

157.

It was reasonable under the circumstances for consumers to Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 55 of 66

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interpret Navient’s statement to mean that a processing delay was the only consequence of submitting incomplete or incorrect information. 158. Navient’s representation was material and likely to mislead a reasonable federal student loan borrower. 159. Therefore, Navient’s misrepresentations as set forth herein, together with or on behalf of Navient Corporation, constitute deceptive acts or practices in violation of sections 1031 and 1036(a)(1) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1).

Count V Deceptive Acts or Practices Related to Cosigner Release Requirements (Against Navient and Navient Corporation) 160. The allegations in Paragraphs 1 to 137 are incorporated here by reference.

161.

As described above, in numerous instances, Navient represented to borrowers with cosigned loans that they could apply for cosigner release if the borrower made a certain minimum number of “consecutive, on-time principal and interest payments” and also met other eligibility criteria.

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162. In truth and in fact, Navient did not allow certain borrowers who met this requirement to apply for cosigner release – those who submitted no additional payment in a month in which they received a $0 bill because they had made a payment in a previous month that was a multiple of the monthly payment amount due. 163. It was reasonable for consumers to interpret Navient’s express representation about the “consecutive, on-time principal and interest payments” requirement to mean that a borrower was only required to submit consecutive “on-time principal and interest payments,” and not that such payments must be made in consecutive months and even in months when no such payment was due.

164. Navient’s misrepresentations were material and likely to mislead a reasonable consumer.

165. Therefore, Navient’s misrepresentations as set forth herein, together with or on behalf of Navient Corporation, constitute deceptive acts or practices in violation of sections 1031 and 1036(a)(1) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1).

Count VI Unfair Acts or Practices Related to Payment Processing Errors Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 57 of 66

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(Against Navient and Navient Corporation) 166. The allegations in Paragraphs 1 to 137 are incorporated here by reference.

167.

As described above, in numerous instances, Navient made errors, sometimes month after month, in misallocating and misapplying payments made by consumers. Moreover, Navient failed to implement adequate processes and procedures to prevent the same errors from recurring, or to prevent the same errors from impacting other consumers. 168. These acts and practices caused or were likely to cause substantial injury to consumers in the form of late fees, interest accrual, and negative credit reporting.

169. These injuries were not reasonably avoidable because consumers had no control over errors, including repeat errors, that Navient made in the processing of their payment(s). 170. The substantial consumer injury caused or likely caused by Navient’s payment processing errors was not outweighed by countervailing benefits to consumers or to competition.

171.

Therefore, Navient’s acts and practices as set forth herein, together with or on behalf of Navient Corporation, constitute unfair acts or Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 58 of 66

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practices in violations of sections 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1).

Count VII Deceptive Acts or Practices Related to Rehabilitation Credit Reporting (Against Pioneer and Navient Corporation) 172.

The allegations in Paragraphs 1 to 137 are incorporated here by reference.

173.

As described above, on information and belief, Pioneer represented to borrowers that completing a rehabilitation program would remove all adverse information regarding the student loan from their credit report.

174.

In truth and in fact, completing a rehabilitation program would not remove all adverse information regarding the student loan from the borrower’s credit report because the original trade line reflecting late payments and delinquencies prior to the default would remain. 175.

It was reasonable for consumers to interpret Pioneer’s express representations to mean what they say.

176.

Those misrepresentations were material to consumers in Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 59 of 66

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choosing whether to participate in the rehabilitation program. 177.

Therefore, Pioneer’s misrepresentations as set forth herein, together with or on behalf of Navient Corporation, constitute deceptive acts or practices in violation of sections 1031 and 1036(a)(1) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1).

Count VIII Deceptive Acts or Practices Related to Rehabilitation Collection Costs (Against Pioneer and Navient Corporation) 178. The allegations in Paragraphs 1 to 137 are incorporated here by reference.

179.

As described above, on information and belief, Pioneer represented to borrowers that all collection fees would be forgiven by the U.S. Department of Education upon completion of the rehabilitation program. On information and belief, Pioneer also represented to some borrowers that the amount of collection fees currently assessed to the account would be forgiven.

180. In truth and in fact, the U.S. Department of Education would not forgive all collection fees or the amount of collection fees currently Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 60 of 66

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assessed, upon completion of the rehabilitation program, because approximately 20% of each rehabilitation payment made by a borrower goes towards collection fees. The U.S. Department of Education would forgive only the amount of collection fees remaining after rehabilitation payments were applied.

181.

It was reasonable for consumers to interpret Pioneer’s express representations to mean what they say.

182. Those misrepresentations were material to consumers in choosing whether to participate in the rehabilitation program. 183. Therefore, Pioneer’s misrepresentations as set forth herein, together with or on behalf of Navient Corporation, constitute deceptive acts or practices in violation of sections 1031 and 1036(a)(1) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1).

VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT Count IX Deceptive Acts or Practices Related to Rehabilitation Credit Reporting (Against Pioneer and Navient Corporation) Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 61 of 66

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184. The allegations in Paragraphs 1 to 133 and 173 to 176 are incorporated here by reference.

185. The Fair Debt Collection Practices Act prohibits debt collectors from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. 186. As described above, on information and belief, Pioneer made false, deceptive, and misleading representations to borrowers that completing the federal loan rehabilitation program would remove all adverse information regarding their loan from their credit report. 187. Therefore, Pioneer, acting together with or on behalf of Navient Corporation, violated the Fair Debt Collection Practices Act. 15 U.S.C. § 1692e, 1692e(10).

Count X Deceptive Acts or Practices Related to Rehabilitation Collection Costs (Against Pioneer and Navient Corporation) 188. The allegations in Paragraphs 1 to 133 and 179 to 182 are incorporated here by reference.

189. The Fair Debt Collection Practices Act prohibits debt collectors Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 62 of 66

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from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. 190. As described above, on information and belief, Pioneer made false, deceptive, and misleading representations to borrowers that all of their collection fees related to the federal loan rehabilitation program would be forgiven by the U.S. Department of Education or that the exact amount of collection fees currently assessed to the account would be forgiven.

191.

Therefore, Pioneer, acting together with or on behalf of Navient Corporation, violated the Fair Debt Collection Practices Act. 15 U.S.C. § 1692e, 1692e(10).

VIOLATIONS OF REGULATION V Count XI Violations of Regulation V Related to Disabled Borrowers (Against Navient and Navient Corporation) 192. The allegations in Paragraphs 1 to 133 are incorporated here by reference.

193. Regulation V, the implementing regulation of the Fair Credit Reporting Act, 15 U.SC. §§ 1681, et seq., imposes certain requirements on Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 63 of 66

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persons or entities that furnish consumer information to consumer reporting agencies for inclusion in consumer reports. 12 C.F.R. § 1022.40- 43.

194. As a student loan servicer, Navient routinely furnished information about federal student loan borrowers’ performance on loans to one or more consumer reporting agencies for inclusion in a consumer report, and is therefore a “furnisher” under Regulation V. 12 C.F.R. § 1022.41(c).

195. Regulation V requires a furnisher to “establish and implement reasonable written policies and procedures regarding the accuracy and integrity of the information relating to consumers that it furnishes to a consumer reporting agency.” 12 C.F.R. § 1022.42(a). 196. However, from at least October 2012 to approximately June 2014, Navient failed to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information that it furnished regarding borrowers who had received a discharge on their federal loans due to a total and permanent disability. 197.

Therefore, Navient, acting together with or on behalf of Navient Corporation, violated Regulation V, 12 U.S. C. § 1022.42(a). Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 64 of 66

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THE COURT’S POWER TO GRANT RELIEF 198. The CFPA empowers this Court to grant any appropriate legal or equitable relief with respect to violations of Federal consumer financial law, including, without limitation, a permanent or temporary injunction, recession or reformation of contracts, the refund of moneys paid, restitution, disgorgement or compensation for unjust enrichment, and civil money penalties. 12 U.S.C. §§ 5565.

PRAYER FOR RELIEF 199. WHEREFORE, the Bureau requests that the Court: a.

Permanently enjoin Defendants from committing future violations of the CFPA, FCRA, Regulation V, the FDCPA, or any other provision of federal consumer financial law, as defined by 12 U.S.C. § 5481(14);

b.

Order Defendants to pay appropriate restitution to consumers harmed by their unlawful conduct; c.

Order Defendants to institute appropriate injunctive relief;

d.

Order disgorgement of ill-gotten revenue against Defendants;

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e.

Impose civil money penalties against Defendants; f.

Order the rescission or reformation of contracts where necessary to redress injury to consumers; g.

Order Defendants to pay the Bureau’s cost incurred in connection with proceeding with this action; and h.

Award additional relief as the Court may determine to be just and proper.

Dated: January 18, 2017

Respectfully submitted,

Anthony Alexis Enforcement Director

David Rubenstein

Deputy Enforcement Director

Thomas Kim

Assistant Deputy Enforcement Director

_/s/ Brandis Anderson_________ Brandis Anderson, CA 261325 (Email: [email protected]) (Phone: 202-435-7548) Nicholas Jabbour, DC 500626 (Email: [email protected]) (Phone: 202-435-7508) Enforcement Attorneys

Attorneys for Plaintiff Consumer Financial Protection Bureau 1700 G Street NW Washington, DC 20552 Fax: (202) 435-9346 Case 3:17-cv-00101-RDM Document 1 Filed 01/18/17 Page 66 of 66

Stipulation (Sept. 2024)

PDF of this document (52 pages)

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IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA Consumer Financial Protection Bureau, Plaintiff, v.

Navient Corporation, et al., Defendants.

Case No. 3:17-CV-00101-RDM 'STIPULATED FINAL JUDGMENT AND FILED SCRANTON ORDER SEP 1 2 2024 PER

DE-;;~c--1--7'Y'--CL_E_R_K_ The Consumer Financial Protection Bureau ("Bureau") commenced this civil action on January 18, 2017 to obtain injunctive and monetary relief and civil penalties, from N avient Solutions, LLC, Pioneer Credit Recovery, Inc., and Navient Corporation. The Complaint alleges violations of sections 1031(a) and 1036(a)(1) of the Consumer Financial Protection Act of 2010 ("CFPA"), 12 U.S.C. §§ 5531(a), 5536(a)(1); section 1022-42(a) of Regulation V, the implementing regulation of the Fair Credit Reporting Act ("FCRA"), 12 C.F.R. § 1022.42(a); and section 807 of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692e, in connection with Defendants' student loan servicing and debt collection practices. The Bureau and Defendants agree to entry of this Stipulated Final Judgment and Order ("Order"), without adjudication of any issue of fact or law, to settle and resolve all matters in dispute arising from the conduct alleged in the Complaint.

Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 1 of 52

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FINDINGS 1.

This Court has jurisdiction over the parties and the subject matter of this action.

2.

Defendants neither admit nor deny any allegations in the Complaint, except as specified in this Order. For purposes of this Order, Defendants admit the facts necessary to establish the Court's jurisdiction over them and the subject matter of this action. 3.

Defendants waive all rights to seekjudicial review or otherwise challenge or contest the validity of this Order and any claim they may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Order. Each Party agrees to bear its own costs and expenses, including, without limitation, attorneys' fees.

4.

Entry of this Order is in the public interest. DEFINITIONS 5.

The following definitions apply to this Order: a.

"Alternative Repayment Plans" means Income- Driven Repayment Plans and extended and graduated repayment plans.

b.

"Assisting Others" includes, but is not limited to: i.

consulting in any form whatsoever for remuneration;

ii.

providing paralegal or administrative support .

serv1ces;

Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 2 of 52

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111.

performing customer service functions, including but not limited to, receiving or responding to consumer complaints;

iv.

formulating or providing, or arranging for the formulation or provision of, any advertising or marketing material, including but not limited to, any telephone sales script, direct mail solicitation, or the text of any Internet website, email, or other electronic communication or advertisement; v.

formulating or providing, or arranging for the formulation or provision of, any marketing support material or service, including but not limited to, web or Internet Protocol addresses or domain name registration for any Internet websites, affiliate marketing services, or media placement services; VI.

providing names of, or assisting in the generation of, potential customers; and vii.

performing marketing, billing, or payment services of any kind.

c.

"Board" means Navient Corporation's duly-elected and acting Board of Directors.

d.

"Clearly and Conspicuously" or "Clear and Conspicuous" means:

i.

In textual communications (e.g., printed publications or words displayed on the screen of an electronic device), the disclosure must be of a type size and location sufficiently noticeable for an Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 3 of 52

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ordinary consumer to read and comprehend it, in print that contrasts with the background on which it appears.

ii.

In communications disseminated orally or through audible means, the disclosure must be delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend it. 111.

In all instances, the disclosure must be in an understandable language and syntax, and with nothing contrary to, inconsistent with, or in mitigation of the disclosures used in any communication with the consumer. e.

"Consumer Reporting Agency" has the meaning provided in section 603 of the FCRA, 15 U.S.C. § 1681 et seq., and any amendments thereto. As of the date of entry of this Order, "Consumer Reporting Agency" is defined under the FCRA as any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports. f.

"Defendants"means Navient Solutions, LLC, Pioneer Credit Recovery, Inc., and Navient Corporation, and their successors and assigns.

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g.

"Deferment" means a temporary postponement of monthly loan payments pursuant to 34 C.F.R. § 682.210. h.

"Direct Loan" means any student loan made to a borrower under the William D. Ford Federal Direct Loan Program, pursuant to 20 U.S.C. Part D. 1.

"Discretionary Forbearance" means any forbearance other than a Mandatory Forbearance. "Discretionary Forbearances" are also referred to as "general forbearances" and include any forbearance that the loan holder or loan servicer is permitted but not required to grant, pursuant to 34 C.F.R. § 682.211. j.

"Effective Date" means the date on which the Order is entered by the Court.

k.

"Enforcement Director" means the Assistant Director of the Office of Enforcement for the Consumer Financial Protection Bureau, or their delegate. 1.

"FFELP Loan" means any student loan made to a borrower under the Federal Family Education Loan Program, pursuant to 20 U.S.C. Part B. m.

"Forbearance" means an option that permits the temporary cessation of student loan payments or an extension of time for making student loan payments, pursuant to 34 C.F.R. § 682.211. "Forbearance" includes any Discretionary Forbearance or Mandatory Forbearance and excludes any Deferment.

n.

"Income-Driven Repayment Plan" or "IDR Plan" has the same meaning as promulgated by the United Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 5 of 52

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States Department of Education, including the following plans: Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), Income-Based Repayment (IBR), Income- Contingent Repayment (ICR), the Saving on a Valuable Education (SA VE) Plan, and any similar plan that the U.S. Department of Education later classifies as an incomedriven repayment plan.

o.

"Mandatory Forbearance" means any forbearance that a lender or loan servicer is required to grant under 34 C.F.R. § 682.211(h).

p.

"MOHELA" means the Missouri Higher Education Loan Authority.

q.

"MOHELA Transaction" means Navient's transaction with MOHELA under which MOHELA became a Sub- Servicer to N avient Solutions, pursuant to an agreement between Navient and MOHELA dated May 7, 2024. r.

"N avient" means N avient Corporation and N avient Solutions, collectively.

s.

"N avient Affiliate" means N avient Credit Finance Corporation, any subsidiary of N avient Credit Finance Corporation, or any securitization trust established by any subsidiary of N avient Credit Finance Corporation, and their predecessors, successors, and assigns. t.

"N avient Corporation" means N avient Corporation and its successors and assigns.

u.

"N avient Solutions" means N avient Solutions, LLC, and its successors and assigns.

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v.

"Ordinary Course FFELP Loan Repurchases" means (a) repurchases of FFELP Loans that are required or permitted under the terms of any agreement in connection with any securitization or any warehouse facility sponsored by N avient or any N avient Affiliate or other securitization owned by N avient; (b) repurchases of FFELP Loans that are required under the terms of any agreement in connection with any sale by N avient or any Navient Affiliate of any FFELP Loans to third-parties, in which such repurchases are required in the event that representations and warranties N avient made about such loans were not true and correct at the time of the sale; and ( c) repurchases of FFELP Loans from FFELP guarantors required by the terms of the Higher Education Act or the terms of any guarantee agreement. "Ordinary Course FFELP Loan Repurchases" do not include: (a) purchases of FFELP Loans that were never owned by any Defendant or any N avient Affiliate as of the Effective Date; and (b) repurchases of rehabilitated FFELP Loans. w.

"Pioneer" means Pioneer Credit Recovery, Inc., and its successors and assigns.

x.

"PSLF" means the Public Service Loan Forgiveness Program, a U.S. Department of Education program intended to encourage individuals to enter and continue in full-time public service employment by forgiving the remaining balance of their qualifying federal student Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 7 of 52

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loans after they satisfy certain public service and loan payment requirements.

y.

"Related Consumer Action" means a private action by or on behalf of one or more consumers or an enforcement action by another governmental agency brought against a Defendant based on substantially the same facts as described in the Complaint.

z.

"Required FFELP Loan Purchases" means purchases of FFELP Loans that are required under the terms of any agreement by N avient or any of its affiliates in connection with any third-party servicing or subservicing agreement, in which such purchases are required in the event of a material servicing error. aa.

"Sub-servicer" means any company to whom responsibility for servicing is sold, transferred, assigned, or subcontracted by any Defendant with respect to any federal loan made, guaranteed, or insured under Title IV of the Higher Education Act, 20 U.S.C. § 1078 et seq., or any private education loan as defined by the Truth in Lending Act, 15 U.S.C. § 165o(a)(8). bb.

"Supervision Director" means the Assistant Director of the Office of Supervision Policy for the Consumer Financial Protection Bureau, or their delegate. cc.

"TEPSLF" means the Temporary Expanded Public Service Loan Forgiveness Program, a U.S. Department of Education program that provides loan forgiveness for qualifying federal student loan borrowers who made some Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 8 of 52

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or all of their requisite monthly PSLF payments under a repayment plan that does not qualify for PSLF. dd.

"TLF" means the Teacher Loan Forgiveness Program, a U.S. Department of Education program intended to encourage individuals to enter and continue in the teaching profession by forgiving a specified amount of their qualifying federal student loans after they satisfy certain teaching requirements and meet any other qualifications.

I.

CONDUCT PROVISIONS Permanent Ban on Servicing of Direct Loans IT IS ORDERED that:

6.

N avient, whether acting directly or indirectly, is permanently restrained from:

a.

Engaging in, or participating in, or Assisting Others in the servicing of any Direct Loan;

b.

Entering into or performing operations under any contract with the Department of Education for the purposes of implementing any program related to student aid arising under Title IV of the Higher Education Act of 1965, as amended, including but not limited to serving as a vendor for the Office of Federal Student Aid's Business Processing Operations; and c.

Holding any ownership interest in any person engaged in or Assisting Others in the servicing of Direct Loans. Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 9 of 52

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Nothing in this Paragraph shall prohibit any Sub-servicer from servicing Direct Loans. Nothing in this Consent Order shall be read as an exception to this Paragraph.

Permanent Ban on Acquiring Additional and Servicing of FFELP Loans IT IS FURTHER ORDERED that:

7.

Navient, whether acting directly or indirectly, is permanently restrained from:

a.

Acquiring any ownership interest, directly or indirectly, in any FFELP Loan on or after the Effective Date; b.

Engaging in, participating in, or Assisting Others in the servicing of any FFELP Loan; and c.

Holding any ownership interest in any person engaged in or Assisting Others in the servicing of FFELP Loans. Nothing in this Paragraph shall: (a) limit Navient's ability to be the master servicer for its portfolio of FFELP Loans consistent with the terms of its securitization or warehouse facilities, third-party servicing or subservicing agreements, or the MOHELA Transaction; (b) limit Ordinary Course FFELP Loan Repurchases or Required FFELP Loan Purchases; or (c) prohibit any Sub-servicer from servicing FFELP Loans. Nothing in this Consent Order shall be read as an exception to this Paragraph. Servicing Terms IT IS FURTHER ORDERED that:

8.

The conduct provisions contained in Paragraphs 10-64 of this Order apply to the servicing of all federal loans made, guaranteed, or insured under Title IV of the Higher Education Act, 20 U.S.C. § 1078 et Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 10 of 52

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seq., and all private education loans as defined by the Truth in Lending Act, 15 U.S.C. § 165o(a)(8), performed by Navient or any Sub-servicer for N avient who receives actual notice of this Order, unless otherwise specified. Servicing of loans for which N avient is the master servicer may not be performed entirely by a third-party company that is not a Sub-servicer. 9.

Navient and its officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with it who receive actual notice of this Order, including any Sub-servicer for Navient who receives actual notice of this Order, whether acting directly or indirectly, may not violate sections 1031 or 1036(a) of the CFPA, 12 U.S.C. §§ 5531, 5536(a); section 1022,42(a) of Regulation V, 12 C.F.R. § 1022.42; and section 807 of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692e. Payment Processing IT IS FURTHER ORDERED that:

Navient shall implement or continue its practice(s), as applicable to: 10.

Crediting of Payments. Promptly and accurately credit payments to the borrower's account not later than the date a mailed payment is received by Navient or by its contractor. This Paragraph 10 shall not be construed to apply to U.S. Department of Education loans for which N avient does not receive borrower payments. a.

Changes in Navient's Payment Requirements or Policies. If N avient makes any material change to requirements or policies relating to the receiving, processing, or handling of loan payments that affect borrower or cosigner action or any change in the lockbox address, provide written notice of the change to the Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 11 of 52

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affected borrowers and/ or cosigners, as applicable, no less than 30 days before the effective date of the change. b.

Grace Period for Payment Non-Compliance. For at least 60 days after the effective date of such change, not impose any late fee, interest accrual other than normal interest, or other charge; furnish negative credit information; cause the loss of any benefit to the borrower or cosigner; or treat any payment that complies with the previous policy as late for any other purpose. 11.

Default Payment Processing Methodology for Loans Grouped for Billing Purposes.

a.

Unless otherwise instructed by the borrower, for any payment or payments in excess of the total amount due across all loans in the billing group ("prepayment"), prioritize allocations to loans by the highest interest rate in descending order, provided, however, if multiple loans are at the same highest rate, first to unsubsidized highest rate federal loans and then to subsidized federal loans with that same highest rate.

b.

Unless otherwise instructed by the borrower, for any payment that does not satisfy the total monthly amount due across all loans in the billing group (an "underpayment"), allocate first to the most delinquent loan, then once all loans are brought to the same level of delinquency, to the loan with the lowest regular monthly payment, then according to the payment allocation methodology in Paragraph n(a), above. Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 12 of 52

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c.

Clearly and Conspicuously provide its default application and allocation of prepayments and underpayments methodologies on Navient's website(s) and in its billing statements. These notices shall be accompanied by a statement informing the borrower and cosigner that they may instruct the servicer of their loan to use a different payment allocation methodology, and a description of the method(s) by which the borrower or cosigner can make such an instruction.

12.

One-Time and Standing Instructions from Borrowers or Cosigners Regarding Processing Payments. Allow borrowers and cosigners to provide one-time or standing instructions regarding payment allocation on any loan or billing group. 13.

Requirements Related to Payments by Third Parties. Permit borrowers and cosigners to request that a third-party payment made on behalf of, or for the benefit of, that borrower or cosigner be reallocated based on the borrower or cosigner's requested allocation within 60 days of the payment date to the extent permitted by the third-party payor and terms of the applicable promissory note or federal requirements. 14.

Requirements Related to Advancement of Due Date. When a borrower or cosigner submits a payment via N avient' s online platform that is sufficient to trigger advancement of the current due date and at least one subsequent due date, permit borrowers the choice of either (i) opting out of advancement of the due date, or (ii) electing advancement of the due date.

15.

Conformity to the Terms of Loans owned by the U.S. Department of Education. In the event that N avient is not servicing Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 13 of 52

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federal loans owned by the U.S. Department of Education and the Department issues rules, regulations, change orders, or Dear Colleague letters addressing payment processing, application, or methodologies, at the option of N avient, N avient may apply such payment processing, application, or methodologies to FFELP Loans serviced by N avient, and servicing of FFELP Loans in conformity with such rules, regulations, change order, or Dear Colleague Letter shall be deemed in compliance with the provisions of Paragraphs 10-16 of this Order. 16.

Terms of Promissory Noteo Notwithstanding any specific requirement set forth above, no provision of this Order shall require Navient to apply allocation instructions that conflict with the terms of a borrower's promissory note or federal requirements. Fees IT IS FURTHER ORDERED that:

17.

Navient shall implement or continue its practice, as applicable, to not charge the following fees: fees to enter a Forbearance status; late fees assessed on a per-loan basis at a fixed-dollar amount; multiple fees for a single late payment; or fees to process payments, unless required by applicable law, rule, or regulation or under contract with the owner of the loan where the owner of the loan is authorized to assess such a fee or to the extent that a third-party payment service charges such a fee to process payment.

Billing Statements & Payment Histories IT IS FURTHER ORDERED that:

For a period of five (5) years from the Effective Date, N avient shall implement or continue its practice, as applicable to: Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 14 of 52

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18.

Mandatory Billing Statement Notices. Include on every billing statement that N avient sends to a borrower or cosigner, at a minimum, the following information. This information shall also appear on the borrower's online account.

a.

On the account level:

i.

Total amount due (including fees, if applicable), including a breakdown of this amount between the total amount past due and the total current scheduled monthly payment;

ii.

Total outstanding balance on the account, including a breakdown of this amount among fees, interest, and principal;

iii.

Fees assessed during the current billing cycle; iv.

The date by which payment of the regular monthly payment amount must be received to avoid incurring additional late fees in the next billing cycle; and v.

For federal loan accounts, the name of the borrower's current repayment plan. If, however, the account is or was previously in an Income-Driven Repayment Plan but payments are no longer being calculated based on income, the borrower's account portal on Navient's website(s) will explain this fact and how to find information related to recertifying income and family size or reapplying for incomedriven repayment, as applicable. 19.

Payment Histories.

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a.

Provide a written payment history to a borrower or cosigner upon request or provide the borrower with instructions as to how to access such history on N avient' s website(s), at no cost to the borrower or cosigner, within 30 days of receiving the request to the extent practicable. The written payment history may be provided to the borrower or cosigner in either electronic or paper format. The payment history shall contain: 1.

The current interest rate for the loan(s) at issue; ii.

The original loan amount for the loan(s) at issue; 111.

The outstanding principal loan balance for the loan(s) at issue as of the date of the request; iv.

The total amount of accrued interest since disbursement;

v.

The date Navient posted each payment; VI.

The amount of each payment applied to fees, interest, and principal;

vii.

The date any interest was capitalized for the loan(s) at issue, the amount of interest capitalized, and the reason for the capitalization event; and VIn. The current repayment plan for each such loan. 20.

Where possible, the full payment history for all loans shall be available online. Where the full payment history of one or more loans cannot be made available online, N avient shall ensure that no less than one (1) year of payment history for such loans is available online. Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 16 of 52

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Borrower Communications for Federal Loans IT IS FURTHER ORDERED that:

21.

The provisions of Paragraphs 21-35 apply only to federal loans made, guaranteed, or insured under Title IV of the Higher Education Act, 20 U.S.C. § 1078 et seq. For a period of five (5) years from the Effective Date, N avient shall implement or continue its practice, as applicable to: 22.

Policies Regarding Oral Communications & Prioritization of Alternative Repayment Plans. Maintain policies and procedures designed to ensure that, before any borrower is placed into a Deferment or Discretionary Forbearance, Navient shall inform such borrower regarding:

a.

The existence and availability of Alternative Repayment Plans. If the borrower has a loan type that is eligible for an Income-Driven Repayment Plan (including through consolidation), this includes: (i) explaining (1) that IDR Plan payments may be as low as $0 per month depending on the borrower's income and family size, (2) that most IDR Plans provide potential interest subsidies, and (3) that IDR Plans provide the possibility of loan forgiveness after meeting certain qualifying payments requirements; and (ii) offering to estimate an income-driven payment amount based on the borrower's stated income and family .

size;

b.

If applicable, the method for applying for Alternative Repayment Plans, either by: (i) directing borrowers to Navient's website(s) for accessing application materials for Alternative Repayment Plans (including, for borrowers Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 17 of 52

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who must consolidate to access Income-Driven Repayment Plans, a consolidation application); or (ii) by providing the borrower with the toll-free telephone number to call and request a paper copy of the applications; and c.

The provisions of Paragraphs 22(a) and (b) of this Order shall not apply to Deferments or Forbearances where enrollment is automatic based upon where the borrower lives or is serving in the military, such as disaster or military Forbearances, in the case of Deferment due to inschool enrollment, or administrative Forbearance due to bankruptcy or disability. The foregoing exception shall apply even where the borrower may have the ability to opt out of such Forbearance or Deferment. 23.

Alternative Repayment Specialists. Except as provided herein, designate personnel who have received enhanced training consistent with Enhanced Training for Alternative Repayment Specialists outlined in Paragraph 23(b) of this Order. These specially designated personnel are hereinafter referred to as "Alternative Repayment Specialists."

a.

Role of Alternative Repayment Specialists. Alternative Repayment Specialists assist borrowers as set forth below regarding Alternative Repayment Plans. b.

Enhanced Training for Alternative Repayment Specialists. Train agents to provide accurate and timely information regarding Alternative Repayment Plans. The Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 18 of 52

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enhanced training for Alternative Repayment Specialists shall include training on:

i.

Alternative Repayment Plans, as well as other options such as Forbearance and Deferment; ii.

Eligibility for, and features, primary benefits, and primary costs associated with, different Alternative Repayment Plans, as well as Forbearance and Deferment; and 111.

Actions that the borrower must take to be evaluated for these options, including actions the borrower must take to submit an IDR Plan application or to qualify for Alternative Repayment Plans. N avient shall implement and administer testing at least annually to determine the satisfactory completion of the enhanced training with regard to each Alternative Repayment Specialist. c.

Access to Alternative Repayment Specialists. The following types of borrowers shall be routed to Alternative Repayment Specialists:

i.

Any borrower who is at least 60 days delinquent; or ii.

Any borrower who is presently enrolled in a Discretionary Forbearance and has been enrolled in Discretionary Forbearance for more than six (6) months of the previous twelve (12) months. d.

Monitoring of Alternative Repayment Specialists. Monitor Alternative Repayment Specialists, including periodic call listening and reviews to monitor the Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 19 of 52

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Alternative Repayment Specialists' compliance with these terms.

e.

Compensation & Incentives for Agents. Not utilize any compensation plan, including any incentive compensation plan, or any penalty, that is intended to minimize the time agents engage in oral communications with borrowers in a manner inconsisten~ with Paragraphs 22 or 23 of this Order, or where such a plan or penalty is reasonably foreseeable to have that effect. f.

Role of N avient Agents Who Are Not Designated Alternative Repayment Specialists. N avient will continue to require all of its call agents, including those who are not designated Alternative Repayment Specialists, to advise all borrowers of the availability of Alternative Repayment Plans whenever the borrower, or their payment history, indicates that the borrower is experiencing financial hardship and that the nature of the hardship may not be temporary.

24.

Limitations. The requirements that are enumerated in Paragraph 22 of this Order shall not prevent any Alternative Repayment Specialist from: (a) providing any information specifically requested by the borrower or responding to any question presented by the borrower, regardless of timing; and (b) respecting a borrower's request to end the call or to not discuss Alternative Repayment Plans. Nor shall the requirements of Paragraph 22 of this Order prevent the Alternative Repayment Specialist from assisting a borrower with any other Request for Assistance, as that term is defined in Paragraph 62 of this Order; nor apply to any oral Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 20 of 52

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communication between an Alternative Repayment Specialist and a borrower in which the sole topic discussed is a recertification of the borrower's income and family size pursuant to any type of application for an Alternative Repayment Plan.

25.

Policies Regarding Inquiry into Public Service. Maintain policies and procedures designed to ensure that, if a borrower calls N avient after the Effective Date, a live customer service agent shall inquire at that time, and at least once a year thereafter: (a) whether the borrower is employed in public service, such as by a government or nonprofit employer; and (b) whether the borrower is interested in learning more about PSLF. or TEPSLF. Navient may develop an interactive tool to solicit answers to these questions from borrowers and an individual borrower's provision of answers through this tool in a given year shall be deemed to be in compliance with this subsection for that year. a.

If the borrower answers affirmatively, Navient shall: i.

Place a code on the borrower's account in accordance with Paragraph 26(c) below; and ii.

Offer to forward the borrower to, or schedule a call back from, a Public Service Specialist. b.

If a borrower goes a year thereafter without calling N avient, N avient shall develop and place a Clear and Conspicuous notice on the borrower's online account page informing the borrower that, if they are employed in public service, such as by a government or nonprofit employer, they can contact a Public Service Specialist to learn more about PSLF or TEPSLF. Such notice shall also link to a U.S. Department of Education website where Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 21 of 52

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borrowers can obtain more information on PSLF and TEPSLF.

26.

Public Service Specialists. Designate personnel who have received enhanced training, consistent with Enhanced Training for Public Service Specialists described in Paragraph 26(b) of this Order. These special designated personnel are hereinafter referred to as "Public Service Specialists."

a.

. Role of Public Service Specialists. Public Service Specialists shall be available to assist borrowers as set forth below regarding PSLF, TEPSLF, and TLF, and respond to complaints concerning these programs as described in Paragraph 30 of this Order. b.

Enhanced Training for Public Service Specialists. Regularly train Public Service Specialists to provide borrowers with accurate, complete, and timely information regarding PSLF, TEPSLF, and TLF. The enhanced training for Public Service Specialists shall include training on:

1.

PSLF, TEPSLF, and TLF, including eligible loan types, steps borrowers can take to obtain an eligible loan type and associated consequences, qualifying employment requirements, qualifying repayment plan requirements and the features of those plans, qualifying payment requirements, features of PSLF, TEPSLF, and TLF, forms associated with the programs, the sequence in which forms must be submitted or in which actions must be taken, Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 22 of 52

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actions that borrowers must take to succeed in pursuing forgiveness, and actions that will hinder borrowers' eligibility or progress toward forgiveness, common problems that borrowers encounter with the programs, and borrowers' options for contesting denials and, if relevant to the inquiry, payment count errors; ii.

TLF's relationship to PSLF and TEPSLF; 111.

U.S. Department of Education policy changes that relate to PSLF, TEPSLF, and TLF; 1v.

When and where to make appropriate referrals relating to PSLF, TEPSLF, and TLF including to any servicer designated by the U.S. Department of Education to administer PSLF, TEPSLF, or TLF; v.

Informational resources and tools available from the U.S. Department of Education or other servicers designated by the U.S. Department of Education as a servicer for PSLF, TEPSLF, and TLF; and vi.

Actions that the borrower must take to be evaluated for and become eligible for an IDR Plan, PSLF, TEPSLF, and TLF including actions the borrower must take to submit an IDR Plan, PSLF, TEPSLF, or TLF related application or certification. Navient shall implement and administer testing at least annually to determine the satisfactory completion of the enhanced training with regard to each Public Service Specialist.

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c.

Access to Public Service Specialists and Public Service Code. The following types of borrowers shall be assigned a public service code and, to the extent a borrower is not already speaking to a Public Service Specialist, shall be offered to be routed to, or offered a call back from, a Public Service Specialist: 1.

Any borrower with one or more Federal loans serviced and identifiable by N avient who mistakenly submits a PSLF or TEPSLF certification or application to N avient;

ii.

Any borrower who expresses interest in, indicates an intent to try to qualify for, or requests information about PSLF, TEPSLF, or TLF; 111.

Any borrower who, on a call with Navient's agent, uses keywords or phrases indicating eligibility, intent, or desire to qualify for or receive more information about PSLF, TEPSLF, or TLF; iv.

Any borrower who, on a call with Navient's agent, expresses an interest in speaking with a Public Service Specialist; and v.

Any borrower with a complaint, question, or inquiry about PSLF, TEPSLF, or TLF.

d.

Monitoring Relating to Public Service. Conduct regular call monitoring and review to evaluate whether questions were prompted and asked; whether calls were transferred to, or scheduled with, Public Service Specialists in compliance with these terms; whether Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 24 of 52

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Public Service Specialists complied with these terms; whether Public Service Specialists provided borrbwers with complete and accurate information and advice; and whether the public service code was appropriately entered and maintained in Navient's system of record. Monitoring of Public Service Specialists shall also include a review of the time borrowers spend on "hold" or in a queue awaiting contact with a Public Service Specialist. Wait times for Public Service Specialists shall be held to the same requirements or standards that N avient applies to other specialized customer service agents such as military specialists.

e.

Compensation & Incentives for Agents. Not utilize any compensation plan, including any incentive compensation plan, or any penalty, that is intended to minimize the time agents engage in oral communications with borrowers in a manner inconsistent with Paragraph 22 or 23 of this Order, or where such a plan or penalty is reasonably foreseeable to have that effect. 27.

Outreach to Borrowers Related to PSLF & TEPSLF. N avient shall develop a notice and distribute it at least annually to all borrowers who have loan types that do not qualify for PSLF (to the extent that such borrowers can consolidate these loans into a Direct Loan that does qualify or are otherwise not permanently ineligible), are currently enrolled in repayment plans that do not qualify for PSLF, or received a public service code in Navient's system of record pursuant to Paragraph 26(c) of this Order. The notice shall Clearly and Conspicuously identify Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 25 of 52

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each of the borrower's federal loans in a single notice and indicate whether each loan is a qualifying loan type and whether each is in a qualifying repayment plan. If one or more of the borrower's loans are not a qualifying loan type, the notice shall identify how the borrower can obtain a qualifying loan type for the one or more loans that are not a qualifying loan type. If one or more of the borrower's loans are not in qualifying repayment plans, the notice shall: identify qualifying repayment plans and the steps the borrower can take to change to a qualifying repayment plan, and indicate that TEPSLF may cover payments made on the wrong repayment plan. The notice shall Clearly and Conspicuously indicate that PSLF has other requirements in addition to having a qualifying loan type and repayment plan. The notice shall Clearly and Conspicuously: a.

Include a web address for a U.S. Department of Education website where borrowers can obtain more information on PSLF and TEPSLF and a link to where they can obtain the PSLF and TEPSLF certification and application; b.

Provide contact information for Public Service Specialists; and c.

Provide contact information for the Federal Student Aid Ombudsman Group.

28.

Changing to Non-Qualifying PSLF Repayment Plans. If a borrower has one or more Direct Loans and a public service code and indicates that they may want to change repayment plans for such Direct Loan(s), Navient shall offer to transfer the borrower to a Public Service Specialist. Before a borrower changes to a repayment plan that does not qualify towards PSLF via telephone, N avient will inform the borrower that the chosen plan does not qualify towards PSLF. If a borrower changes or is Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 26 of 52

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changed to a repayment plan that does not qualify towards PSLF via means other than telephone, within 30 days of the repayment plan change, N avient will notify the borrower in writing that the chosen plan does not qualify towards PSLF. This notice shall Clearly and Conspicuously include a web address for a U.S. Department of Education website where borrowers can obtain more information on PSLF and TEPSLF and provide contact information for Public Service Specialists.

29.

Consolidating PSLF Eligible Loans. Defendants will not assist or advise that a borrower consolidate PSLF eligible loans without accurately informing the borrower about whether qualifying payments the borrower already made toward forgiveness of those loans will or will not be lost as a result of consolidation of PSLF-eligible loans. If Defendants send a borrower a consolidation application, they will include with that application a notice that accurately and Clearly and Conspicuously informs the borrower about any consequences that consolidation of PSLF-eligible loans may have on qualifying payments toward forgiveness on those loans. 30.

PSLF Specific Disputes. In response to complaints received by N avient from formerly or currently serviced borrowers concerning PSLF /TEPSLF, Navient shall assign one or more Office of Customer Advocate ("OCA") specialists who have received enhanced training consistent with Paragraph 26(b) of this Order ("OCA-Public Service Specialists") to review whether the borrower's payments did not qualify for PSLF /TEPSLF and whether N avient made a contributing servicing error, misrepresentation, or omission. To make this determination, the OCA- Public Service Specialists shall review the account history for all loans, including without limitation, if any, payment records, Electronic Fund Transfers, written and electronic correspondence, prior complaints or Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 27 of 52

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escalated inquiries, phone calls and recordings, and notes related to phone calls, prior audits in which the borrower's account was identified as subject to a problem, records from prior servicers that are in Navient's possession, and any other information/documentation Navient typically reviews. The OCA-Public Service Specialist shall document their findings and communicate those findings and the reasons for those findings to the borrower in writing.

a.

If N avient is unable to provide evidence disputing a borrower's complaint that N avient made a contributing error, misrepresentation, or omission, Navient will not dispute that Navient made such error, misrepresentation, . .

or om1ss1on.

b.

IfNavient finds evidence that supports a borrower's complaint that Navient made a contributing error, misrepresentation, or omission, N avient will acknowledge to the borrower that N avient made such error, misrepresentation, or omission.

c.

If the immediately foregoing Paragraphs 3o(a) or 3o(b) of this Order apply, N avient will communicate its findings and the reasons for those findings to the borrower's current servicer, copying the U.S. Department of Education, and encourage the servicer and the U.S. Department of Education to provide forgiveness or a correction to the borrower's qualifying payment count if the reason payments were non-qualifying may have related to an error, misrepresentation, or omission. Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 28 of 52

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d.

If the borrower's complaint relates to having the right loan type but making payments under the wrong repayment plan, then the findings that N avient provides to the borrower shall include information about the potential relief available under TEPSLF.

31.

Oral Communications Regarding Amounts Owed. Implement or maintain policies and procedures to disclose to borrowers and cosigners, concurrent with any payment demand, the payment amount required to cure a borrower's delinquency or avoid negative credit reporting, and to permit borrowers to pay that amount without requiring borrowers to make any monthly payment prior to its scheduled due date. 32.

Cover Emails Accompanying Electronic Billing Statements. Cover emails from N avient notifying a borrower with a delinquent federal education loan that an electronic billing statement is available on Navient's website(s) shall disclose the steps the borrower can take to learn about Alternative Repayment Plans. 33.

Website Notices of Alternative Repayinent Plans. Maintain on Navient's website(s) a description of Alternative Repayment Plans and a link to the U.S. Department of Education website where borrowers can obtain more information and apply. 34.

Requirements Related to Recertification of Income and Family Size Under an IDR Plan. For any borrower enrolled in an IDR Plan: At a reasonable time period prior to the then current IDR Plan recertification deadline ("annual deadline"), send written or electronic notices to the borrower regarding the requirement and the deadline to recertify the borrower's income and family size. Between 90 days and 20 days prior to the borrower's annual deadline, Navient shall make no fewer Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 29 of 52

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than four attempts to contact borrowers who are enrolled in an IDR Plan but have not submitted an application to recertify income and family size, and shall make at least one additional attempt if the borrower has not submitted an application after the annual deadline date has passed. 35.

Cover Emails Accompanying IDR Plan Recertification Communications. Include in the subject field of any electronic communication relating to an upcoming IDR Plan recertification the following statement, or a substantially similar statement: "Take Action Now or Your Monthly Payment May Increase."

Consolidation IT IS FURTHER ORDERED that:

36.

The provisions of Paragraphs 37-38 of this Order apply only to federal loans made and guaranteed or insured under Title IV of the Higher Education Act, 20 U.S.C. § 1078 et seq. After completion of the MOHELA Transaction, Navient shall require that MOHELA complies with the requirements of Paragraphs 37-38.

37.

Responding to Borrower Inquiries Regarding Consolidation. N avient shall respond to borrower inquiries regarding consolidation of FFELP Loans into a Direct Consolidation Loan with accurate and complete information.

38.

Timely Providing the Loan Verification Certification. For each borrower for whom N avient receives a Loan Verification Certificate, N avient shall complete and return to the Department of Education the accurate Loan Verification Certification of the amount owed within ten (10) business days of receipt, regardless of whether the paper or Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 30 of 52

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electronic return method has been chosen, consistent with 34 C.F .R. § 685.22o(f)(1)(i).

Borrower Communications for Private Education Loans IT IS FURTHER ORDERED that:

39.

The provisions of Paragraphs 40-43 of this Order apply to servicing and collections of all private education loans (15 U.S.C. § 1650). 40.

Private Student Loan Alternative Repayment Arrangements. Navient shall not misrepresent the availability of, or requirements or qualifications for, private student loan alternative repayment arrangements.

41.

Properly Evaluating Private Student Loan Alternative Repayment Arrangement Requests From A Borrower. N avient shall establish policies and procedures and implement them consistently in order to facilitate the evaluation of private student loan alternative repayment arrangement requests.

42.

Oral Communications Regarding Amounts Owed. N avient shall implement or maintain policies and procedures to disclose to borrowers and cosigners, concurrent with any payment demand, the payment amount required to cure a borrower's delinquency or avoid negative credit reporting, and to permit borrowers to pay that amount without requiring borrowers to make any monthly payment prior to its scheduled due date.

43.

Oral and Written Communications Regarding Bankruptcy. Navient shall not infor~ borrowers that private loans are non-dischargeable in bankruptcy or unlikely to be dischargeable in bankruptcy. Navient shall establish policies and procedures to ensure that Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 31 of 52

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they direct borrowers who raise the issue of bankruptcy to discuss the potential for loan discharge with bankruptcy counsel. Cosigned Loans IT IS FURTHER ORDERED that:

Navient shall implement or continue its practice, as applicable to: 44.

Notice of Cosigner Release. For all loan accounts that may be eligible for the potential release of a cosigner based upon the terms and conditions of their loans, provide a one-time notice ("Notice of Cosigner Release") describing: the criteria then in effect for qualifying for cosigner release; an explanation as to what constitutes a consecutive, on-time payment; a web address where the cosigner release application can be accessed and if the notice is electronic, a link thereto; statements that (i) Navient will evaluate the borrower's credit history and ability to repay before granting cosigner release and describe the process for applying for cosigner release; (ii) borrowers should check their payment history to determine whether they have met the consecutive on-time payment requirement; (iii) overpayments of more than the monthly payment amount may not count toward cosigner release; (iv) payments made by a borrower's employer may not count towards cosigner release; and (v) a phone number borrowers can call if they have questions about cosigner release.

45.

Website Publication of Information Related to Cosigner Release. Post the information contained in the Notice of Cosigner Release, described in Paragraph 44 of this Order, on N avient' s website(s).

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46.

Qualifying Payments for Consecutive, On-Time Payments Requirement. In calculating consecutive, on-time payments for purposes of qualifying for cosigner release, include each consecutive, scheduled principal and interest payment immediately preceding the cosigner release application submission. a.

Except as defined by the terms of the loan or its promissory note, the following payments qualify for cosigner release: Any on-time payments made within the billing cycle, including payments within the grace period, which would constitute a full principal and interest payment for that billing cycle and shall not include any payments made pursuant to an interest rate reduction program or other program permitting partial or no payment.

b.

Not restart a borrower's progress toward meeting the consecutive, on-time payment requirement for cosigner release if, due to a prepayment which resulted in the advancement of a due date, the borrower makes no payment in response to a $0 bill.

47.

Notice Concerning Impact on Certain Payment Arrangements. If a borrower or cosigner requests a change in terms that would restart the borrower's progress towards meeting the consecutive, ontime payment requirement for cosigner release, notify the borrower in writing of the impact of such an arrangement and provide such borrower the right to withdraw or reverse the request to avoid such impact. If the request for the change in terms is made over the phone or online, N avient shall inform the borrower or cosigner of the impact of such an arrangement Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 33 of 52

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and provide the borrower or cosigner the right to withdraw or reverse the request to avoid such impact.

48.

Notice of Incomplete Application for Cosigner Release. If N avient requires a written application to apply for cosigner release and receives an incomplete application, send the borrower a written notice that includes the following information, within 30 days of receipt of such incomplete application:

a.

A statement that the application is incomplete; b.

The information needed by Navient to consider the application complete; and c.

The date by which the applicant must furnish the missing information after which date the application may be denied, which must be no less than 30 days from which the notification is postmarked or emailed. 49.

Cosigner Release Denial. In the event that Navient denies cosigner release, N avient will provide the borrower a deriial letter that Clearly and Conspicuously provides the reasons for such denial. Payoff IT IS FURTHER ORDERED that:

Navient shall implement or continue its practice, as applicable to: 50.

Online Information Regarding Payoff Process. Maintain a Clear and Conspicuous description on Navient's website(s) of the methods by which a borrower or cosigner may obtain a valid Payoff Statement for a single loan or group of loans. 51.

Controls for Accurate Payoff Statements. Maintain policies and procedures to ensure that each payoff amount communicated Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 34 of 52

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to the payoff requestor, whether orally or in a payoff statement, is accurate for the corresponding expiration date stated therein. 52.

Paid in Full Notice. When N avient receives a payment in good funds equal to or exceeding the amount indicated in the payoff statement for a particular loan or loans, provide within 75 days of such receipt, at no cost to the borrower or cosigner, a written or electronic notice to borrowers and any cosigners confirming that no outstanding balance remains on such loan(s).

53.

Notice of Attempt to Pay Off. IfNavient receives a payment greater than or equal to 95 percent of the outstanding balance of a borrower's loan(s) in a group but less than the amount required to pay the loan in full, provide a monthly billing statement to the borrower setting forth, among other items, the remaining unpaid principal balance as of the statement date.

54.

Refund of Overpayments Following Payoff. Remain in compliance with U.S. Department of Education regulations for refunding overpayments following payoff. N avient shall disclose its policy for refund of overpayments following payoff on Navient's website(s). Requirements Related to the Transfer of Servicing IT IS FURTHER ORDERED that:

Navient shall implement or continue its practice, as applicable to: 55.

Notice by Transferor Servicer at the Time of Transfer of Servicing. When acting as the Transferor Servicer, as defined in Regulation X, 12 C.F.R. § 1024.31, provide to each borrower and cosigner subject to the transfer a written notice ("Notice by Transferor Servicer") not less than 15 days before the effective date of the transfer. Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 35 of 52

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56.

Notice by Transferee Servicer. When acting as the Transferee Servicer, as defined in Regulation X, 12 C.F.R. § 1024.31, provide to each borrower and cosigner subject to the transfer a written notice ("Notice by Transferee Servicer") not more than 15 days after the effective date of the transfer.

57.

Prohibition on Late Fees during Servicing Transfers. During a period covering at least the 60-day period beginning on the effective date of transfer of the servicing of a loan, a payment timely made to the Transferor Servicer may not be treated as late for any purpose by Navient when acting as the Transferee Servicer. 58.

Transferor Forwarding of Payment Received. To the extent practicable, for at least 120 days beginning on the effective date of transfer of servicing of a loan, when N avient is acting as the Transferor Servicer, use reasonable efforts to forward payments received to the Transferee Servicer.

59.

Electronic Fund Transfer Authority. Unless a borrower's authorizations for recurring electronic fund transfers are automatically transferred to the Transferee Servicer, when Navient is acting as Transferee Servicer, make available to a borrower or cosigner whose loan servicing is transferred an online, telephone, and written process through which borrowers may make a new authorization for recurring electronic fund transfers.

60.

Certain Transfers Excluded. The following transfers are not assignments, sales, or transfers of loan servicing for purposes of Paragraphs 55-61 of this Order if there is:

a.

No change in the payee, address to which payment must be delivered, account number, or amount of payment due; Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 36 of 52

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b.

A transfer between affiliates;

c.

A transfer that results from a merger or acquisition of servicers or Sub-servicers;

d.

A transfer that occurs between master servicers without changing the Sub-servicer; or e.

A transfer that occurs pursuant to U.S. Department of Education direction or instruction.

61.

Communication with Borrowers/Transferees on Servicer Transfers Related to PSLF. Notwithstanding the foregoing exclusions, when Navient is acting as the Transferor Servicer, assign Public Service Specialists to handle questions from formerly and currently serviced borrowers, and from Transferee Servicers about billing and payment histories, repayment plans, missing or incomplete loan information, including any information relevant to PSLF and TEPSLF, and shall ensure successful and timely transfer of loan data sufficient for the Transferee Servicer to determine whether the borrower has made qualifying payments for the PSLF or TEPSLF programs while serviced by N avient. N avient shall also ensure that the Transferee Servicer receives any information in Navient's possession relevant to such determinations that came from a prior servicer.

Requests for Assistance, Account Dispute Resolution, and Appeals IT IS FURTHER ORDERED that:

62.

Requests for Assistance. N avient shall implement or continue its practice to maintain reasonable policies and procedures for providing readily accessible methods for borrowers or cosigners to submit a request, inquiry, or complaint by phone, email, or U.S. mail; and Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 37 of 52

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processing, investigating, responding to, and resolving all inquiries, complaints, account disputes, and requests for documentation ("Request for Assistance") from borrowers or cosigners in a timely and effective manner.

63.

Appealing Requests for Assistance Outcomes. N avient shall provide on Navient's website(s) a description of how to appeal decisions made by the OCA and a description of the appeal process. Post-Default Collections IT IS FURTHER ORDERED that:

64.

Communications Regarding Post-Default Resolution Options. When discussing the terms and conditions of federal education loan rehabilitation, N avient must accurately and Clearly and Conspicuously describe the characteristics, requirements, and consequences of each postdefault resolution option available to borrowers, including the impact on a borrower's credit, the application of collection fees, and the requirements for disability discharge.

Pioneer 65.

In the event that Pioneer engages in or resumes federal education loan debt collection activities, Pioneer and its officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with it who receive actual notice of this Order, whether acting directly or indirectly, may not violate sections 1031 or 1036(a) of the CFPA, 12 U.S.C. §§ 5531, 5536(a), and section 807 of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692e, and when discussing the terms and conditions of federal education loan rehabilitation, Pioneer must accurately and Clearly and Conspicuously describe the characteristics, Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 38 of 52

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requirements, and consequences of each post-default resolution option available to borrowers, including the impact on a borrower's credit, the application of collection fees, and the requirements for disability discharge. II.

Compliance Plan IT IS FURTHER ORDERED that:

66.

Within 60 days of the Effective Date, N avient must create and implement a comprehensive compliance plan designed to ensure that Navient's student loan servicing activities comply with all applicable laws that the Bureau enforces, including Federal consumer financial laws, and the terms of this Order (Compliance Plan). The Compliance Plan must include, at a minimum:

a.

Detailed steps for addressing each action required by this Order;

b.

A mechanism to ensure that the Board is kept apprised of the status of compliance actions; and c.

Specific timeframes and deadlines for implementation of the steps described above.

Navient will provide the Compliance Plan to the Bureau upon request. 67.

In the event that Pioneer engages in or resumes federal education loan debt collection activities, Pioneer must create and implement a comprehensive compliance plan designed to ensure that Pioneer's debt collection activities comply with all applicable laws that the Bureau enforces, including Federal consumer financial laws, and the terms of this Order (Compliance Plan). The Compliance Plan must include, ata ..

m1n1mum:

Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 39 of 52

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a.

Detailed steps for addressing each action required by this Order;

b.

A mechanism to ensure that the Board is kept apprised of the status of compliance actions; and c.

Specific timeframes and deadlines for implementation of the steps described above.

Pioneer will provide the Compliance Plan to the Bureau upon request. III.

Role of the Board and Executives IT IS FURTHER ORDERED that:

68.

The Board has the ultimate responsibility for ensuring that the Defendants comply with this Order.

69.

Defendants' Chief Executive Officers and the Board must review all plans and reports required by this Order, and any submissions to the Bureau prior to such submission.

70.

One year after the Effective Date, Defendants must submit to the Supervision Director an accurate written compliance progress report (Compliance Report) that has been approved by the Board, the accuracy of which is sworn to under penalty of perjury, and which, at a minimum: a.

Describes the steps that the Board and Defendants' Chief Executive Officers have taken to reasonably assess whether Defendants are complying with the Compliance Plan and each applicable paragraph and subparagraph of the Order;

b.

Describes in detail whether and how Defendants have complied with the Compliance Plan and each applicable paragraph and subparagraph of the Order, including the Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 40 of 52

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manner of verification of such compliance and any corrective actions taken to remedy potential noncompliance with the applicable requirement, paragraph, orsubparagraph;and c.

Attaches a copy of each Order Acknowledgment obtained under Section VIII, unless previously submitted to the Bureau.

71.

The Board and Defendants' Chief Executive Officers must: a.

Authorize whatever actions are necessary for Defendants to assess whether Defendants are complying with the Compliance Plan and each applicable paragraph and subparagraph of the Order;

b.

Authorize whatever actions, including corrective actions, are necessary for Defendants to fully comply with the Compliance Plan and each applicable paragraph and subparagraph of the Order; and c.

Require timely reporting by management to the Board and Defendants' Chief Executive Officers on the status of compliance obligations.

MONETARY PROVISIONS IV.

Order to Pay Redress IT IS FURTHER ORDERED that:

72.

A judgment for monetary relief and redress is entered in favor of the Bureau and against the Defendants, jointly and severally, in the amount of $100 million.

Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 41 of 52

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73.

Within 10 days of the Effective Date, Defendants must pay to the Bureau, by wire transfer to the Bureau or to the Bureau's agent, and according to the Bureau's wiring instructions, $100 million in full satisfaction of the judgment as ordered in Paragraph 72 of this Section. 74.

Any funds received by the Bureau in satisfaction of this judgment will be deposited into a fund or funds administered by the Bureau or the Bureau's agent according to applicable statutes and regulations to be used _for redress for injured consumers as identified by the Bureau, including, but not limited to, refund of moneys, restitution, damages or other monetary relief, and for any attendant expenses for the administration of any such redress.

75.

If the Bureau determines, in its sole discretion, that redress to consumers is wholly or partially impracticable or otherwise inappropriate, or if funds remain after redress is completed, the Bureau will deposit any remaining funds in the U.S. Treasury. Defendants will have no right to challenge any actions that the Bureau or its representatives may take under this Section.

76.

Payment of redress to any consumer under this Order may not be conditioned on that consumer waiving any right. v.

Order to Pay Civil Money Penalty IT IS FURTHER ORDERED that:

77.

Under section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the Complaint, Defendants must pay a civil money penalty of $20 million to the Bureau. Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 42 of 52

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78.

Within 10 days of the Effective Date, Defendants must pay the civil money penalty by wire transfer to the Bureau or to the Bureau's agent in compliance with the Bureau's wiring instructions. 79.

The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau as required by section 1017(d) of the CFPA, 12 U.S.C. § 5497(d).

Bo.

Defendants must treat the civil money penalty paid under this Order as a penalty paid to the government for all purposes. Regardless of how the Bureau ultimately uses those funds, Defendants may not: a.

Claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Order; or b.

Seek or accept, directly or indirectly, reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, with regard to any civil money penalty paid under this Order. 81.

To preserve the deterrent effect of the civil money penalty in any Related Consumer Action, Defendants may not argue that any Defendant is entitled to, nor may any Defendant benefit by, any offset or reduction of any compensatory monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action or because of any payment that the Bureau makes from the Civil Penalty Fund. If the court in any Related Consumer Action offsets or otherwise reduces the amount of compensatory monetary remedies imposed against any Defendant based on the civil money penalty paid in this action or based on any payment that the Bureau makes from the Civil Penalty Fund, Defendants must, within 30 days after entry of a final order granting such Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 43 of 52

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offset or reduction, notify the Bureau, and pay the amount of the offset or reduction to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action.

VI.

Additional Monetary Provisions IT IS FURTHER ORDERED that:

82.

In the event of any default on Defendants' obligations to make payment under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any outstanding amounts not paid from the date of entry of judgment to the date of payment, and will immediately become due and payable.

83.

Defendants relinquish all dominion, control, and title to the funds paid under this Order to the fullest extent permitted by law and no part of the funds may be returned to Defendants. 84.

The facts alleged in the Complaint will be taken as true and be given collateral estoppel effect, without further proof, in any subsequent action by the Bureau to enforce the Order or its rights to any payment or monetary judgment under the Order.

85.

Defendants acknowledge that their Taxpayer Identification Numbers (Social Security Number or Employer Identification Number), which Defendants previously submitted to the Bureau, may be used for collecting and reporting on any delinquent amount arising out of this Order, in accordance with 31 U.S.C. § 7701. 86.

Within 30 days of the entry of a final judgment, order, or settlement in a Related Consumer Action, Defendants must notify the Supervision Director of the final judgment, order, or settlement in writing. Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 44 of 52

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That notification must indicate the amount of redress, if any, that Defendants paid or are required to pay to consumers and describe the consumers or classes of consumers to whom that redress has been or will be paid.

COMPLIANCE PROVISIONS VII.

Reporting Requirements IT IS FURTHER ORDERED that:

87.

Defendants must notify the Bureau of any development that may affect compliance obligations arising under this Order, including but not limited to, a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor company; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by or against Defendants; or a change in any Defendant's name or address. Defendants must provide this notice at least 30 days before the development or as soon as practicable after the learning about the development, but in any case, no longer than 14 days after the development.

88. Within 7 days of the Effective Date, each Defendant must: a.

Designate at least one telephone number and email, physical, and postal address as points of contact that the Bureau may use to communicate with the Defendant; b.

Designate at least one telephone number and email, physical, and postal address as points of contact for Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 45 of 52

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consumers with inquiries related to consumer relief under the Order;

c.

Identify all businesses for which the Defendant is the majority owner, or that the Defendant directly or indirectly controls, by all of their names, telephone numbers, and physical, postal, email, and Internet addresses;

d.

Describe the activities of each such business, including the products and services offered, and the means of advertising, marketing, and sales.

89.

Defendants must report any change in the information required to be submitted under Paragraph 88 at least 30 days before the change or as soon as practicable after learning about the change, whichever is sooner. VIII.

Order Distribution and Acknowledgment IT IS FURTHER ORDERED that:

90.

Within 7 days of the Effective Date, each Defendant must submit to the Bureau an acknowledgment of receipt of this Order, sworn under penalty of perjury.

91.

Within 30 days of the Effective Date, Defendants must deliver a copy of this Order to each of its and its Sub-servicer's board members and executive officers, as well as to any of its and its Sub-servicer's managers who have responsibilities related to the subject matter of the Order. 92.

For 5 years from the Effective Date, Defendants must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section VII, any future board members and executive officers of Defendant or any Sub-servicer, as well as to any of its Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 46 of 52

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and its Sub-servicer's managers who have responsibilities related to the subject matter of the Order.

93.

Defendants must secure a signed and dated statement acknowledging receipt of a copy of this Order, within 30 days of delivery, from all persons receiving a copy of this Order under this Section. 94.

Ninety days from the Effective Date, Defendants must provide the Bureau with a list of all persons and their titles to whom this Order was delivered through that date under Paragraphs 91 and 92 and a copy of all signed and dated statements acknowledging of receipt of this Order under Paragraph 93.

IX.

Recordkeeping IT IS FURTHER ORDERED that:

95.

Defendants must retain, for at least 10 years from the Effective Date, the following business records: a.

All documents and records necessary to demonstrate full compliance with the Compliance Plan and each provision of this Order, including all submissions to the Bureau. b.

Copies of all policies, procedures, guidance documents, or training materials provided to employees, agents, or subcontractors of N avient relating to the handling of, or communications with, borrowers who indicate that they are having difficulty paying their student loans, would like to reduce payments on their student loans (including paying zero), or would like to enroll in Forbearance or an Alternative Repayment Plan, including all scripts, Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 47 of 52

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flowcharts, job aids, and decision trees relating to such interactions or communications;

c.

Copies of all policies and procedures relating to compensation and incentives provided to call agents, Alternative Repayment Specialists, Public Service Specialists, and their respective supervisors; d.

Copies of all policies and procedures relating to written communications with borrowers about recertifying income and family size for Income-Driven Repayment Plan, including templates of all such written communications;

e.

Copies of all policies and procedures relating to cosigner release, including any disclosures relating to cosigner release;

f.

Copies of all policies and procedures relating to furnishing information about student loan borrowers to Consumer Reporting Agencies;

g.

All consumer complaints and refund requests ( whether received directly or indirectly, such as through a third party), and any responses to those complaints or requests; and h.

All information in Defendants' possession as of the Effective Date relating to the identity and last-known location of any consumer who received a Discretionary Forbearance on at least one loan that was eligible for an Income-Driven Repayment Plan from July 21, 2011 to January 18, 2017 or who received a Total and Permanent Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 48 of 52

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Disability ("TPD") discharge and for whom Special Comment Code "AL" was reported from January 1, 2012, to December 31, 2014.

96.

All documents and records must be maintained in their original electronic format. Data should be maintained in such a way that access, retrieval, auditing, and production are not hindered. 97.

Defendants must make these materials available to the Bureau upon the Bureau's request.

x.

Notices IT IS FURTHER ORDERED that:

98.

Unless otherwise directed in writing by the Bureau, Defendants must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, "CFPB v. Navient Corporation et al., Case No. 3:17-CV-00101-RDM," and send them by email to [email protected]: ATTN: Supervision Director Consumer Financial Protection Bureau Office of Supervision XI.

Cooperation with the Bureau IT IS FURTHER ORDERED that:

99.

Defendants must cooperate fully to help the Bureau determine the identity and last-known location of each consumer who received a Discretionary Forbearance on at least one loan that was eligible for an Income-Driven Repayment Plan from July 21, 2011 to January 18, 2017 or who received a TPD discharge and for whom Special Comment Code "AL" Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 49 of 52

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was reported from January 1, 2012, to December 31, 2014, to the extent such information is in Defendants' possession or control. Defendants must provide such information in its possession or control within 14 days of receiving a written request from the Bureau. 100. Upon request by the Bureau for the last-known contact information for any borrower with a commercial FFELP loan that is held or serviced by any Defendant or Sub-servicer, Defendants must either (a) provide such information, as reflected in Defendants' records, to the Bureau within 10 business days of the Bureau's request or (b) request such information from the Sub-servicer within 10 business days of the Bureau's request and provide such information to the Bureau within 5 business days of Defendants' receipt of such information from the Sub-servicer. 101. Defendants must remain registered for the Bureau's Company Portal and in connection with responding to consumer complaints and inquiries on the Company Portal, must comply with the timely response requirements set forth in§ 1034(b)(1)-(3) of the CFPA, 12 U.S.C. § 5534(b). XIL Compliance Monitoring IT IS FURTHER ORDERED that:

102. Within 14 days of receipt of a written request from the Bureau, Defendants must submit additional compliance reports or other requested information, which must be sworn under penalty of perjury; provide sworn testimony; or produce documents.

103. Defendants must permit Bureau representatives to interview any employee or other person affiliated with Defendants who has agreed to such an interview regarding: (a) this matter; (b) anything related to or Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 50 of 52

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associated with the conduct described in the Complaint; or (c) compliance with this Order. The person interviewed may have counsel present. 104. Nothing in this Order will limit the Bureau's lawful use of compulsory process, under 12 C.F.R. § 1080.6. XIII.

Transfer or Assignment of Operations 105. Should any Defendant seek to sell, transfer, assign, or subcontract all or part of its operations that are the subject of this Order or any of its servicing rights or obligations that are the subject of this Order to any entity, including any Sub-servicer, Defendants must, as a condition of the sale, transfer, assignment, or subcontract, include in the written agreement provisions that require the buyer, transferee, assignee or subcontractor to (1) comply with the applicable provisions of this Order; and (2) if the buyer, transferee, assignee, or subcontractor further sells, transfers, assigns, or subcontracts all or part of its operations that are subject of this Order or any of its servicing rights or obligations that are the subject of this Order, include in the written agreement provisions that require such further buyer, transferee, assignee, or subcontractor to comply with the applicable provisions of this Order. 106. The Bureau releases and discharges Defendants from all potential liability for law violations that the Bureau has or might have asserted based on the allegations of the Complaint, to the extent such practices occurred before the Effective Date and the Bureau knows about them as of the Effective Date. The Bureau may use the practices described in the Complaint in future enforcement actions against Defendants and their affiliates, including, without limitation, to establish a pattern or practice of violations or the continuation of a pattern or practice of Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 51 of 52

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violations or to calculate the amount of any penalty. This release does not preclude or affect any right of the Bureau to determine and ensure compliance with this Order, or to seek penalties for any violations of this Order.

XIV.

Retention of Jurisdiction IT IS FURTHER ORDERED that:

107. All pending motions are hereby denied as moot. 108. The Court will retain jurisdiction of this matter for the purpose of enforcing this Order.

IT IS SO ORDERED.

DATED this J ·ray of Y if10tttk, 2o2ef.

,,.---- United States District Court Judge Case 3:17-cv-00101-RDM Document 583 Filed 09/12/24 Page 52 of 52