Washington State

Office of the Attorney General

Attorney General

Bob Ferguson


SEATTLE — A King County Superior Court judge ruled that Navient, the country’s largest student loan servicer, violated the Consumer Protection Act by engaging in unfair and deceptive conduct related to Washingtonians’ student loans. This is the first time a judge has ruled that Navient broke a consumer protection law in a student loan servicing lawsuit filed by a state’s Attorney General or federal consumer protection agency. Attorney General Bob Ferguson has been litigating this case since January 2017, seeking accountability for Navient’s conduct, legally enforceable terms to prevent future unlawful conduct and financial restitution for Washingtonians harmed by the unlawful conduct.

King County Superior Court Judge Veronica Galván issued an order today that Navient violated the Consumer Protection Act with its conduct related to family and friends co-signing loans.

Today’s ruling by Judge Galván does not resolve all the issues in the case. A full trial on Ferguson’s additional claims is scheduled for April 18, 2022. 

Navient came into existence when Sallie Mae, which Congress created in 1973 to support guaranteed student loan programs, split itself in 2014. Navient and the Sallie Mae Bank emerged from that split. Navient services the loans of more than 12 million borrowers nationally and approximately two million in Washington state. Altogether, it services more than $300 billion in federal and private student loans.

“I will protect student loan borrowers from lenders that deceive Washingtonians,” Ferguson said. “Too many student loan borrowers in Washington are struggling to stay afloat. We will continue seeking accountability for Navient’s unlawful conduct and student loan relief for thousands of Washingtonians who were treated unfairly.”

Navient’s deceptive co-signer release practices

Judge Galván issued an order today that granted partial summary judgment on one of Ferguson’s consumer protection claims in the 2017 lawsuit against Navient. Galván ruled that Navient’s statements promoting co-signer release misrepresented the way Navient actually implemented the program. Navient deceptively promoted a “co-signer release” feature of private loans to entice family and friends to co-sign loans. Navient then put up arbitrary barriers and failed to disclose that very few borrowers ever achieve co-signer release.

Specifically, Navient told borrowers they could become eligible to remove a co-signer by, among other things, making a certain number of consecutive, on-time loan payments. However, if a borrower made payments in a lump sum ahead of their regular due date, then resumed making the remaining payments as regularly scheduled, Navient treated the break in payments as a disqualifying event for releasing their co-signer. Navient applied this requirement in ways reasonable borrowers could not have foreseen.

For example, if a borrower had $100 monthly payments but made a $300 payment, Navient did not count this lump-sum payment as three consecutive on-time payments, even though the account was current and paid in advance. In other words, Navient penalized borrowers for paying in advance.

Status of the 2017 lawsuit

Discovery continues on the remaining claims against Navient. The Attorney General’s Office has received terabytes of data from Navient and information dating back to when it was Sallie Mae.

Ferguson’s lawsuit seeks to provide financial assistance and relief for thousands of Washingtonians who were subjected to Navient’s unfair and deceptive loan servicing and collection practices. Ferguson asserts Navient violated the state Consumer Protection Act with numerous illegal servicing and collection methods and, as Sallie Mae, origination of risky subprime loans to consumers.

The 2017 lawsuit came after a multi-year investigation by Washington, Illinois and the federal Consumer Financial Protection Bureau, each of which have filed lawsuits against Navient. The states of California, Pennsylvania, Mississippi and New Jersey later filed their own lawsuits with similar claims against Navient.

Remaining claims against Navient

Washington’s lawsuit against Navient includes several other claims relating to the conduct of Navient, and its predecessor Sallie Mae, in originating and servicing student loans.

For example, Ferguson asserts that, while operating as Sallie Mae, the company made subprime, predatory loans to students attending certain for-profit colleges, despite its own expectations that an extremely high percentage of students would not be able to repay them. Navient made these subprime loans as part of “custom deal” programs with schools in order to gain access to highly profitable federally guaranteed loan volume and “prime” private student loan borrowers.

The Attorney General’s Office also asserts that Navient improperly steered financially distressed borrowers into loan forbearance instead of explaining income-driven repayment options. While forbearance was good for the company because it was simple and cheap, it was not beneficial to most borrowers in the long term. Forbearance allowed borrowers to suspend payments temporarily, but their interest continued to accumulate. When repayment resumed, Navient would add the accumulated interest to the loan principal and borrowers ended up paying more interest on their initial interest.

Ferguson’s initial investigation also found that when servicing student loans, Navient often misapplied borrower payments and failed to follow borrower instructions for how to allocate excess payments. This caused borrowers to receive unwarranted collection calls and required them to spend time correcting Navient’s mistakes.

Assistant Attorneys General Julia Doyle, Heidi Anderson, Craig Rader, Kathleen Box, Seann Colgan and Tad Robinson-O’Neill are handling the case for the Attorney General’s Office.

Winning student loan relief for borrowers

The lawsuit is part of the Attorney General’s Student Loan Initiative, a larger effort to help borrowers navigate the complexity of signing up for then paying off student loFerguson's student loan initiativeans.

In January 2019, Ferguson entered a legally binding agreement for more than $7.6 million in debt relief from Career Education Corporation (CEC), a for-profit higher education company, as part of legal action over the company’s use of deceptive practices to attract potential students. CEC owned and operated two campuses in Washington until it closed them down. In addition to debt relief and other injunctive terms, the company is legally required to disclose to prospective students accurate information about cost, graduation rates, job placement rates and median debt for graduates.

In September 2020, Ferguson announced that 816 former ITT Technical Institute (ITT Tech) students in Washington state would receive $5.9 million in debt relief. ITT Tech was a for-profit college that abruptly closed all of its 149 campuses in September 2016, including campuses in Seattle, Everett and Spokane Valley. The amount covered all outstanding debts these borrowers owed to PEAKS Trust, a private loan program created to fund loans for the for-profit college ITT Tech. The debt forgiveness resolved an investigation Ferguson launched with a bipartisan coalition of attorneys general into unfair and deceptive lending practices by PEAKS Trust. The agreement required PEAKS Trust, formed after the 2008 financial crisis, to dissolve.

In June 2019, Ferguson announced that as a result of an investigation, Student CU Connect LLC (CUSO) would provide debt relief for 100 percent of its student loans for deceiving ITT Tech students when it issued the loans. CUSO paid a total of $5.1 million in student loan debt relief to 538 Washington borrowers who attended ITT Tech. The median amount of debt relief Washington borrowers received was $6,096.

Ferguson also has recovered more than $1.5 million cracking down on debt adjustment companies that charge fees to help borrowers consolidate their federal student loans and enroll in income-driven repayment plans — tasks that borrowers’ loan servicers can and should help them with for free.

AG’s Student Loan Initiative

The Attorney General’s Office introduced the Student Loan Transparency Act in 2017, a bill that required schools to provide students basic information on their student loans. The bill passed overwhelmingly in the state House with a bipartisan vote and unanimously in the Senate. Ferguson called for the legislation when he filed the Navient lawsuit.

To assist student loan borrowers in Washington, the Attorney General's Office has compiled a Student Loan Survival Guide.

Additionally, borrowers who need help understanding or resolving problems with their student loans should contact Washington’s Student Loan Advocate at loanadvocate@wsac.wa.gov.



The Office of the Attorney General is the chief legal office for the state of Washington with attorneys and staff in 27 divisions across the state providing legal services to roughly 200 state agencies, boards and commissions. Visit www.atg.wa.gov to learn more.



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