Following the possibility of a lawsuit targeting Navient Corp for its alleged mistreatment of borrowers, investors sent the company’s shares to an all-time low. The stock closed at its lowest price since the company separated from Sallie Mae last year. The drastic decrease in stock value is the result of worries that the company may not make good on its financial obligations.
Navient Corp is the nation’s largest student loan company and the Consumer Finance Protection Bureau has been investigating the company for nearly two years. The possible lawsuit against Navient comes as a result of alleged violations of consumer protection laws and allegations that the company cheated borrowers. Consumers have filed thousands of complaints against Navient and it has paid out “more money in refunds to aggrieved borrowers with student loans” than any other company.
The student loan sector has gained increased attention from federal and state regulators due to the massive amount of debt ($1.3 trillion) that borrowers have amassed. The increased surveillance comes as borrowers continue to fall behind on their payments “despite the improving economy and generous federal plans that allow borrowers to make payments based on their earnings.” The CFPB has noticed troubling parallels between the way monthly payments and repayment options are processed by student loan companies and the treatment of borrowers by mortgage companies during the recent housing crisis. The student loan market and companies such as Navient Corp., require continual monitoring to prevent wrongdoings and unnecessary financial risk.