The Attorney General of Pennsylvania, Joshua Shapiro, earlier this week announced an important win in a decision from the United States Court of Appeals. This decision is part of the Office of Attorney General’s ongoing court battle with Navient, the nation’s second-largest servicer of federal and private student loans, with the lawsuit originally filed in 2017.
Attorney General Josh Shapiro sued Navient for engaging in unfair and deceptive lending including failing to offer proper repayment plans to students. In a major decision announced at the end of July, the case is now able to move forwards towards trial.
“Today’s decision is a big step in favour of all Pennsylvania consumers, especially anyone with student loans,” said Attorney General Shapiro. “Navient repeatedly and deliberately put their own profits ahead of the goals of every borrower who worked to better their lives through education.”
A year after court proceedings began, the United States District Court for the Middle District of Pennsylvania denied Navient’s Motion to Dismiss in its entirety. Navient appealed this ruling and earlier this week the Third Circuit Court of Appeals affirmed the district court’s ruling allowing the case to proceed towards trial.
“Navient has attempted to delay this case at every turn and failed yet again with the Third Circuit Court’s decision,” said Attorney General Shapiro. “Despite their efforts, my Office won’t stop pursuing Navient until I know that they can’t deceive Pennsylvanians again. The decision also makes clear consumers won’t be left unprotected when the Federal government fails to step up as has happened all too often during the current administration.”
The Court rejected Navient’s core argument, that the Federal Consumer Financial Protection Act (CFPA) prohibits states from bringing CFPA claims where there is already a pending lawsuit by the Consumer Financial Protection Bureau (CFPB) to address the same violative conduct.
The Court also rejected Navient’s argument that parallel state and Federal lawsuits would waste judicial resources. Among other reasons, the Court wrote that “states may be able to pick up slack when the federal Government fails to enforce and regulate. If the Bureau were under pressure to settle or withdraw its lawsuit, states would still be free to protect the rights of consumers in their states.” It noted that “Navient’s CEO has lobbied the Bureau to drop its lawsuit.”
A total of 1.76 million Pennsylvanians collectively owed $70.9 billion in private and federal student loans as of December 2019. The average student loan debt for a new college graduate in Pennsylvania was $37,061 in 2018 – second highest among all states.