Baltimore City schoolteacher Michelle Means had been chipping away at her $60,000 in federal student debt and knew about a loan-forgiveness program Congress started in 2007 to help public servants.
Yet, each time she talked to representatives at Navient, a for-profit company that services loans for the U.S. Department of Education, she came away believing that she wouldn’t qualify for the program. Means, 32, said Navient advised her that she had to make 120 consecutive payments, without missing one or putting her loan in forbearance for even a month, before she would be eligible.
It turns out that was incorrect, she said. Earlier this month Means and eight other teachers sued Navient, saying the company steered borrowers like Means away from loans that would qualify them for the forgiveness program, while giving them false assurances they were on track for loan forgiveness and misstating the terms under which they would qualify.
Had she known that the 120 payments didn’t have to be consecutive, she said, “I would be very close to having my federal loans being forgiven.” The American Federation of Teachers, one of the largest teachers unions in the country, is paying the legal fees associated with the lawsuit for their members.
Navient, based in Wilmington, works under a contract with the U.S. Department of Education to service over $205.9 billion in federal student loans, owed by approximately 6.1 million people, according to the lawsuit. Navient declined to comment for this article.
A first-grade teacher in a West Baltimore elementary school, Means has undergraduate and master’s degrees. Even though she commutes from Southern Maryland each day, she said she stays at the school because she has built strong relationships with families and students. “I have had opportunities to go elsewhere. I feel I am valued here,” she said.
Congress passed a loan forgiveness program for public servants that allowed certain government employees such as teachers, police officers and those in the military to have their student loans forgiven if they worked in those jobs for 10 years and satisfied other criteria. The suit alleges that Navient took advantage of the complexity of the program to discourage borrowers from filling out the paperwork and encouraged them into forbearance programs where their interest payments continued to accrue.
The first cohort of borrowers to have made 120 payments are now eligible for the loan forgiveness, but few are finding themselves accepted. A recent U.S. Department of Education report showed that only 96 of 28,000 borrowers who applied were green-lighted.
Lawyers for the teachers say that Navient representatives are told to spend under seven minutes on each phone call with a borrower, which puts pressure on them to deal with a question quickly rather than thoroughly. In addition, the company doesn’t have a financial incentive to help people into the program, the suit said.
According to Lena Konanova, an attorney for the firm of Selendy & Gay PLLC, the suit poses the question of how much Navient has benefited on the backs of public service employees. While the borrowers may have blamed themselves for failing to look into the written details of the program or for failing to qualify, in fact thousands of public employees may have been given false information and the firm is seeking to make the lawsuit a class action, Konanova said.
In addition, the lawsuit said teachers were told repeatedly that they were on track to qualify for loan forgiveness, only to find out many years later that their loans had not been consolidated and restructured to allow for them to qualify. So all of the payments for years now don’t count, the suit alleges.
Jennifer Guth, 47, is a media resource teacher at Graceland Park-O’Donnell Heights Elementary School, who has seen her debt balloon as she struggled to make the payments.
She graduated from college with no debt, but then went to law school. But after practicing for some years, she said, she realized she wasn’t happy and became a teacher.
Baltimore City required Guth to earn a master’s in education to be certified, and so she collected even more student debt. In all, she borrowed $160,000, which with interest ballooned to $275,000. She was unable to handle payments of more than $2,000 a month, and so she has spent the last four years taking community college classes just so she can have her loans deferred.
“It is overwhelming, and it is one of these things where I can’t even wrap my head around,” Guth said. She said she can’t understand how the debt has grown so, but that she was repeatedly told by Navient representatives she spoke to at different times that she didn’t have to fill out paperwork to be part of the loan forgiveness program. She said she found out later that if she had filled out paperwork her loans would have been transferred to another company, taking away profits from Navient, so the company had a disincentive to help borrowers.
In addition, Guth said, she was offered no options beyond deferral or forbearance, which add to the debt.
“I was overwhelmed and frustrated, and no matter who I called back I got different answers,” Guth said. “In the last four years I have made zero progress on my loan.”
She filed suit, she said, because “I wanted them to stop taking advantage of borrowers and start putting people ahead of the profit.”
Neither Guth or Means regrets staying in their current job as city teachers. “I was a lawyer and now I teach...I like my job a lot. There is not one day in my job that I don’t laugh.”