Navient, spun off from Sallie Mae in 2014, has exited federal student loan servicing but continues to service private student loans and collect on defaulted federal debt. Their terms of service reflect years of regulatory criticism and litigation, though fundamental borrower protections remain limited.
Private loan agreements include mandatory arbitration clauses that prevent class action lawsuits. Ironically, while Navient paid billions in settlements, individual borrowers cannot band together for similar claims under their loan agreements.
Navient retains discretion over how payments are applied across multiple loans. Historically, this resulted in payments being applied to minimize principal reduction, extending loan terms and increasing total interest paid.
Unlike federal loans, private loans have no guaranteed access to income-driven repayment, forgiveness programs, or refinancing options. Navient is under no obligation to modify terms regardless of borrower circumstances.
Terms grant Navient broad authority to report to credit bureaus. Even disputes in process can result in negative reporting, and incorrect information can take months to correct through dispute processes.
Upon default, Navient can accelerate the entire loan balance, making the full amount immediately due. Combined with collection fees (often 25% of principal plus interest), this dramatically increases what borrowers owe.
The 2022 settlement provided relief to some borrowers but didn't change the underlying terms:
Key protections missing from Navient private loans: