SCRANTON, Penn.—A federal judge has rejected student loan servicer Navient Corp's bid to dismiss a U.S. regulator's lawsuit accusing the nation's largest student loan servicer of systematically misleading millions of borrowers and driving up their loan repayment costs.
U.S. District Judge Robert Mariani refused to accept Navient's argument that the Consumer Financial Protection Bureau's lawsuit must be thrown out because the regulator itself was unconstitutional, and had not enacted rules declaring specific practices unfair, deceptive or abusive, Reuters reported.
In his 60-page decision, Mariani also found it premature to conclude that any alleged harms suffered by borrowers were avoidable, noted Reuters.
"The bureau's complaint provides multiple specific examples of payment processing errors and then alleges that Navient failed to have policies and procedures in place to identify and prevent the same processing errors from occurring month after month," Mariani wrote, according to the Reuters report.
Navient services over $300 billion of loans for more than 12 million borrowers, the CFPB has estimated.