Hundreds of student-loan borrowers who applied for debt cancellation are being denied relief by a major lender, over 20 Democratic lawmakers say

• Sen. Elizabeth Warren led over 20 colleagues in requesting the CFPB and FTC investigate student-loan company Navient.
• They said they're concerned that Navient might be improperly denying defrauded borrowers debt relief.
• Navient said it's committed to getting relief to borrowers, but the discharge process is still in its early stages.

A group of Democratic lawmakers said that a major student-loan company is denying some student-loan borrowers relief that they might qualify for.

Sen. Elizabeth Warren led over 20 of her Democratic colleagues, including Rep. Alexandria Ocasio-Cortez and Sen. Ron Wyden, in sending a letter Wednesday to the Consumer Financial Protection Bureau and the Federal Trade Commission urging an investigation into the student-loan company Navient.

In the letter, viewed exclusively by Business Insider, the lawmakers wrote that Navient's process to cancel student loans for borrowers who said their schools defrauded them is "flawed, convoluted, and opaque," and it may have resulted in borrowers being "improperly" denied relief they qualified for.

A process known as the borrower defense to repayment allows borrowers with federal student loans to apply for debt cancellation if they believe their schools defrauded them. If approved, the government would wipe out their balances.

However, borrowers with private loans held by Navient cannot access the federal process. Instead, they can request a school misconduct application from Navient, and Navient would then decide whether to approve it.

The company previously said it's committed to addressing all "valid" misconduct claims.

The issue, the lawmakers wrote, is that Navient has denied relief for the majority of borrowers who applied. Navient wrote to Warren and her colleagues in a September letter, viewed by BI, that the company services about 65,000 borrowers who attended for-profit schools. As of September, Navient has sent 4,233 borrowers a school-misconduct discharge application, and 1,801 borrowers have submitted applications. Of the 1,061 applications Navient fully reviewed, 238 borrowers have been approved for relief, and 823 have been denied.

Navient wrote to the lawmakers that borrowers' applications are "carefully reviewed" by a legal team to determine eligibility for debt cancellation, and to date, it has approved over $8 million in relief. Still, the lawmakers said that the denials do not contain sufficient explanations, "leaving a fraction of Navient's borrowers who attended predatory, for-profit colleges with the relief that they deserve."

BI previously spoke to some borrowers who have attempted to navigate Navient's school misconduct application process. Nick Eucker, 38, said he received an application from Navient, and after submitting 200 pages worth of paperwork in support of his claim he was defrauded, Navient denied his application. The only reasoning he was provided was: "You do not meet the requirements for discharge based on misconduct by your school."

A Navient spokesperson previously said that the discharge process is still in its early stages, and the company expects more borrowers to see relief as it rolls out.

Still, the lawmakers said that Navient has the authority to cancel the loans of impacted borrowers without requiring a lengthy application process.

"Navient should cancel all of the private fraudulent debts for borrowers who have been harmed by its misconduct," they wrote, "all of whom the company is able to identify without an application."