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Regulators, Consumers Target Student Debt Servicer Navient

“That was an unfair and deceptive practice under the Consumer Fraud Act,” she said.

Navient’s lawyer, however, told the judge the federal Higher Education and Truth in Lending acts already impose disclosure requirements. The Illinois attorney general wants to retroactively impose new disclosure requirements, Navient said.

“What they’re doing is adding disclosure requirements that exceed the ones that Congress set,” Michael Shumsky, a lawyer representing Navient, told the judge.

“There’s no allegation that when somebody called Navient and said, ‘I’m struggling to make my payments. Is there something that you can do for me?’ that Navient said, ‘Go away. We’re not interested in helping you,'” Shumsky said.

As for allegations that payments were misapplied, Navient said an internal analysis of customer complaints shows, in most cases, borrowers didn’t specify how to allocate their payments. The company said it’s a common consumer credit practice to apply payments to outstanding interest before principal.

While Navient’s request to toss out the Illinois lawsuit is under review, a federal judge in Pennsylvania earlier this month rejected the company’s motion to dismiss the CFPB’s lawsuit.

Navient takes issue with many of the complaints that have been filed against the company with regulators.

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