Navient Challenges U.S. Claim of $22.3 Million in Overcharges

Student loan servicing company Navient Corp. is suing the government to challenge a finding that it overcharged the Department of Education by $22.3 million.

The department on Jan. 15 ordered Navient Jan. 15 to return the money, based on a 2009 inspector general’s probe that found that the Student Loan Marketing Association, or Sallie Mae, improperly charged the government “special allowance payments” on federal loans for which it provided collection and other services.

Navient, which was spun off from Sallie Mae in 2014, sued the Education Department in federal court in Alexandria, Virginia, on Tuesday, calling its order “arbitrary and capricious” in violation of the law covering federal agency actions.

The company claims it followed government guidance that was later reversed. It is seeking a ruling blocking the order that it turn over the $22.3 million plus attorneys fees.

The suits comes as Navient’s debt-collection unit has been under fire by advocates for borrowers who have filed lawsuits across the country arguing that some types of student debt can be canceled in bankruptcy proceedings like most other debts. Navient last month beat back an attempt by three borrowers to force its debt-collection unit into bankruptcy court.

The case is Navient Solutions LLC v. Department of Education, 21-cv-00324, U.S. District Court, Eastern District of Virginia (Alexandria).

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