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.
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.
