Consumer Financial Protection Bureau v. Navient Corporation

Navient Corporation (defendant) was a company that serviced millions of federal and private student loans. Navient processed monthly loan payments and helped student-loan borrowers navigate the repayment process. Navient offered to help borrowers who had difficulty repaying their loans and provided multiple options for repayment, including forbearance and income-driven repayment plans. Forbearance allowed borrowers to stop paying their loans for a period of time, during which interest would continue to accrue. Income-driven repayment plans used a borrower’s income to calculate more affordable monthly payments. Borrowers were required to recertify their income annually to remain on their income-driven repayment plans. Navient notified borrowers that it was time to recertify their plans by sending reminder emails or letters. However, the emails only notified borrowers that a notice was available in their Navient accounts—the emails did not specify that the notices were about recertification. For borrowers experiencing long-term financial problems, income-driven repayment plans generally were better than forbearance. However, it took Navient employees a longer time to enter borrowers into income-driven repayment plans. Because employees were paid more to resolve problems in short amounts of time, employees were incentivized to place borrowers into forbearance. The Consumer Financial Protection Bureau (CFPB) (plaintiff), the federal agency charged with enforcing the Consumer Financial Protection Act (CFPA) and other consumer-protection acts, filed a lawsuit against Navient in federal district court, alleging that Navient violated the CFPA by steering borrowers into forbearance without giving them adequate financial advice and by failing to adequately notify borrowers in income-driven repayment plans of their recertification requirement. Navient moved to dismiss the CFPB’s complaint, arguing that its actions did not violate the CFPA.