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

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.