North Carolina Attorney General Josh Stein

In this Wednesday, March 22, 2017, file photo, North Carolina Attorney General Josh Stein speaks at a roundtable discussion at the Gastonia Police Department community room in Gastonia, North Carolina. Stein has filed an amicus brief defending the states’ ability to enforce state and federal consumer protection laws against student loan companies.

North Carolina Attorney General Josh Stein joined a coalition of 32 attorneys general pushing for the lawsuit filed by the Commonwealth of Pennsylvania against student loan servicer Navient to go forward in the federal courts.

Stein filed a brief in the United States Court of Appeals Friday defending the states’ ability to enforce state and federal consumer protection laws against student loan companies.

The case alleges that Navient exploited borrowers.

 “As Attorney General, it’s my responsibility to protect students from predatory lenders and protect their ability to safely invest in their future,” Stein said. “I’m taking this action to ensure that I can continue to defend North Carolina’s students and hold companies responsible when they violate state or federal law.”

More than 92 percent of the $1.5 trillion in outstanding student loan debt is owned or guaranteed by the federal government, according to the brief. Private student loan companies like Navient oversee the management of the loans. Those companies are still subject to the same business practices laws like any other company, Stein said.

Pennsylvania sued Navient in 2017 based on claims that it violated the Consumer Financial Protection Act and the Pennsylvania Unfair Trade Practices and Consumer Protection Law. The lawsuit said Naviend lent to borrowers from schools with low graduation rates, misrepresented cosign releases and failed to offer certain payment options among other violations.

Navient asked the judge to dismiss Pennsylvania’s lawsuit, which the judge later denied.

The company has since filed an appeal under the grounds that the Higher Education Act supercedes Pennsylvania’s state-law claims and the case duplicates a Consumer Financial Protection Bureau lawsuit against Navient.

Stein and the attorneys general from New York, Alaska, California, Colorado, Connecticut, Delaware, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, South Dakota, Tennessee, Vermont, Virginia, Washington, Wisconsin and the District of Columbia have stepped in to support Pennsylvania’s effort.

The states claim that Navient recommended forbearances instead of income-driven repayment plans to financially burden students. Forbearances subject borrowers to interest rates while the plans do not.

The company also misled those enrolled in the repayment plans about the requirements to stay in the plans, according to the brief. The representatives made payment processing errors that led to late fees and, in some cases, delinquency, the brief also alleges.

The coalition of attorneys argues that the Consumer Financial Protection Act does not limit the states’ authority to bring federal claims in cases where the Consumer Financial Protection Bureau has already sued.

“Navient seeks to disrupt the status quo by asking this Court to displace the long-standing practice of dual oversight by federal and state authorities over matters involving higher education, including student loans,” the brief states.

 

 

Staff Reporter

Nyamekye Daniel has been a journalist for three years. She was the managing editor for the South Florida Media Network and a staff writer for The Miami Times. Daniel's work has also appeared in the Sun-Sentinel, Miami Herald and The New York Times.