The People vs. The Student Loan Industry

By: Michael Corcoran - truthout.org

Zack’s Investment Research recently recommended that people buy stock for Navient (formerly Sallie Mae), the nation’s largest servicer of student loans. This may seem curious given that the company is facing a historic lawsuit filed on January 18 from the Consumer Financial Protection Bureau (CFPB), that alleges (in agreement with aggrieved student borrowers) that the company has “illegally cheated many struggling borrowers” for years through “shortcuts and deceptions.”

Organizers are cautiously optimistic the lawsuit may lead to relief and/or reform in the coming years. But this “heightened regulatory scrutiny over alleged anti-consumer practices” isn’t scaring investors, who remain bullish on student loan bullies. Navient’s shares outperformed expectations, benefiting from a 30 percent spike in its stock just as Donald Trump was elected president.

The 30 percent spike in Navient (Sallie Mae) stocks directly after the election of Donald Trump. Good news for Navient tends to be bad news for those suffering from the ever-worsening student loan crisis, which was already perilous before Trump and his education secretary Betsy DeVos started shaping policy, to the delight of predatory student lenders. DeVos has already cut consumer protections, notably reversing an Obama executive order on April 17 that put, as the New York Times reported, “great weight on a company’s track record when selecting student loan vendors” to service federal loans. This means the very same government that is suing Navient for “cheating borrowers,” is now unable to consider this when handing out massive contracts.