Lisa Madigan Sues Navient, Sallie Mae For Student Loan Offenses
CHICAGO (CBS) -- Illinois Attorney General Lisa Madigan is suing some of the largest names in the student loan industry.
It affects tens of thousands of people in Illinois. CBS 2's Mai Martinez reports.
Navient and Sallie Mae treated student loan borrowers unfairly from start to finish – and that is why Illinois Attorney General Lisa Madigan is suing both.
The lawsuit alleges they engaged in aggressive and widespread subprime lending – leading to tens of thousands of bad loans in Illinois.
"One of the most egregious offenses we found is that Navient saddled students with expensive and risky subprime loans that they designed it to fail," Madigan said.
According to Madigan, the companies made billions off the loans, which carried very high interest rates and fees and were often given to students at some of the worst schools, including poorly accredited for-profit schools.
"Navient entered into agreement with schools to pay the company for some of those defaults, so that Navient did not have to shoulder all of the losses," she said. "Meanwhile borrowers were left with the lifetime of the debt that they were unable to pay."
And Madigan adds it is not just students who were set up to fail.
"A growing number of loans require cosigners so you've seen parents and grandparents are now on the hook sometimes for some very difficult loans," Madigan said.
The Consumer Financial Protection Bureau announced Wednesday it is also suing Navient for the same reasons in Madigan's lawsuit.
Navient officials dispute the allegations and claim they are politically motivated days ahead of a new presidential administration.
