Navient Is Banned From Federal Student Loan Servicing. CFPB Forces Them To Compensate Borrowers For $100 Million
Navient is banned from federal student loan servicing. The CFPB has also ordered the company to pay $120 million in fines and compensation to the borrowers.
The SCPB made the announcement on Thursday. It comes nearly eight years after the CFPB sued Navient formally known as Sallie Mae.
A CFPB investigation found that Navient directed student loan borrowers into more costly repayment plans. As a result, the CFPB is forcing Navient to pay $100 million among hundreds of thousands of borrowers. In addition, the company will pay a $20 million fine.
The federal watchdog filed litigation in 2017 in federal court in Pennsylvania. At the time, the company was the country’s biggest servicer of student loans. They oversaw more than 12 million borrowers.
The CFPB alleges the loan-servicing giant mismanaged payment processing. Thus, hurting the credit of disabled borrowers whose loans had been discharged.
Navient not longer buys or services federal student loans. The company transferred its contract to another company in 2021.
The CFPB told the media that a deal means hundreds of thousands of people will be compensated.
The CFPB said:
Consumers do not need to do anything to obtain redress and should be aware of scammers that may try to use CFPB employees’ names and imagery to try to steal money or private information. The CFPB will never require consumers to pay money to obtain redress, nor will we ask for additional information before consumers can cash a redress check that we’ve issued.
The settlement is not a first for the company. In 2022, it reached a $1.85 billion deal with 39 states. Navient agreed to cancel about 66,000 student loans to settle claims it engaged in predatory lending practices.
