Borrowers, denied public service loan forgiveness, file lawsuits

“The debate over preemption masks what is really at stake — millions of public employees who’ve dedicated their lives to helping others, only to be stripped of their right to loan forgiveness and the ability to enforce that right when their servicers defraud them,” said Randi Weingarten, president of the American Federation of Teachers.

Paul Hartwick, vice president of corporate communications at Navient, said the company informs borrowers about the main details of the public service loan forgiveness program. The company does not comment on ongoing litigation, he said.

Many of these lawsuits brought by student loan borrowers against their servicers will boil down to a he said-she said dispute, said Mark Kantrowitz, an expert in higher education law. “I’ve yet to hear from any borrower who can present documentation, such as email messages, or even contemporaneous notes, that support their claim that the lender lied,” Kantrowitz said.

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Moreover, he said, it’s unclear whether companies like Navient even have a legal obligation to inform borrowers that their loans do not qualify for public service loan forgiveness. “The lender’s fiduciary duty is to the U.S. Department of Education and the lender’s investors, not the borrowers,” he said.

However, Gus Centrone, a consumer lawyer in Florida, said student loan servicers position themselves as the main source of information for borrowers and therefore do have a responsibility to provide comprehensive and accurate advice. Like Arkovich, he has received calls from hundreds of borrowers who’ve run into problems with the public service loan forgiveness program, he said.

Centrone is involved in a lawsuit against Navient, which seeks to become a class action. If the case is successful, he said, at least tens of thousands of public servants could be eligible for damages.