California Latest To Sue Navient

“Navient’s loan servicing abuses have compounded the misery of parents and students who sacrificed to pay for college,” said Xavier Becerra, California’s attorney general, in a statement announcing that he’ll file a lawsuit against the student-loan servicer. The suit alleges that when borrowers paid extra money to pay their loans down faster, Navient applied the overpayments to interest and fees instead of to the principal, despite telling borrowers they would apply the excess payment to principal.  Becerra also alleges that Navient misrepresented the amount borrowers had to pay to become current on their loans and didn’t discharge the loans of borrowers who were eligible to have the debt wiped away due to a total and permanent disability. California’s suit comes as many states and consumer advocates are fighting the Trump administration over how closely student loan companies and for-profit colleges should be regulated. State attorneys general, including Becerra, have challenged the Department of Education over plans to rollback Obama-era rules that hold for-profit colleges accountable for misleading borrowers. Betsy DeVos, head of the department, issued a memo earlier this year saying that states can’t regulate student-loan servicers like Navient because any authority they have over the companies is superseded by the firms’ contracts with the federal government.