Navient banned from student loans, ordered to pay $120 million in settlement

Sep 13

Lauren Taylor

By Lauren Taylor, Emma Stoltzfus (Video Editor)

This report was created with support from enhanced software.

In a settlement, Navient is permanently banned from servicing federal student loans and must pay $120 million in penalties and borrower relief. The Consumer Financial Protection Bureau (CFPB) accused Navient of steering struggling borrowers into costly forbearance options instead of income-driven repayment plans, mishandling payment processing, and harming the credit of disabled borrowers.

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Navient allegedly enrolled 1.5 million borrowers in multiple consecutive forbearances, resulting in $4 billion in additional interest charges.

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In a statement, Navient says it does not agree with the CFPB’s allegations. However, the company states, “This agreement puts these decade-old issues behind us.”

Under the settlement, Navient is banned from serving federal student loans. Navient will also pay a $20 million penalty and provide $100 million in relief to affected borrowers.

The CFPB said it will mail checks to eligible borrowers, and affected consumers will not need to do anything to obtain redress.

Tags: college students, Crime, Loans, Student loan debt, Student loan forgiveness, Student Loans, students

Lauren Taylor

IN A SETTLEMENT — NAVIENT IS PERMANENTLY BANNED FROM SERVICING FEDERAL STUDENT LOANS AND MUST PAY $120 MILLION IN PENALTIES AND BORROWER RELIEF.

THE CONSUMER FINANCIAL PROTECTION BUREAU ACCUSED NAVIENT OF STEERING STRUGGLING BORROWERS INTO COSTLY FORBEARANCE OPTIONS INSTEAD OF INCOME-DRIVEN REPAYMENT PLANS, MISHANDLING PAYMENT PROCESSING AND HARMING THE CREDIT OF DISABLED BORROWERS.

NAVIENT ALLEGEDLY ENROLLED 1.5 MILLION BORROWERS IN MULTIPLE CONSECUTIVE FORBEARANCES, RESULTING IN $4 BILLION DOLLARS IN ADDITIONAL INTEREST CHARGES.

IN A STATEMENT, NAVIENT SAYS IT DOES NOT AGREE WITH THE C-F-P-B’S ALLEGATIONS, HOWEVER, THE COMPANY STATES “THIS AGREEMENT PUTS THESE DECADE-OLD ISSUES BEHIND US.”

UNDER THE SETTLEMENT, NAVIENT IS BANNED FROM SERVING FEDERAL STUDENT LOANS.

NAVIENT WILL PAY A $20 MILLION PENALTY AND PROVIDE $100 MILLION IN RELIEF TO AFFECTED BORROWERS.

THE C-F-P-B SAYS IT WILL MAIL CHECKS TO ELIGIBLE BORROWERS AND AFFECTED CONSUMERS WILL NOT NEED TO DO ANYTHING TO OBTAIN REDRESS.

FOR SAN, I’M LT.