Navient Corp. has agreed to pay $120 million to settle allegations of deceptive student loan practices, the Consumer Financial Protection Bureau (CFPB) announced Thursday. The proposed settlement includes $100 million in payments to affected borrowers and a $20 million fine, while also permanently barring Navient from servicing federal student loans.
Navient $120 million settlement : Key Terms of the Settlement
As part of the deal, which requires court approval, Navient will no longer service loans made by the U.S. Department of Education, including Direct Loans, and will be prohibited from servicing or acquiring most loans made under the now-defunct Federal Family Education Loan Program (FFELP). CFPB Director Rohit Chopra said the settlement aims to end years of abuse, stating, “For years, Navient’s top executives profited handsomely by exploiting students and taxpayers.”
Navient, which succeeded Sallie Mae, expressed relief over the resolution but denied wrongdoing. “While we do not agree with the CFPB’s allegations, this resolution is consistent with our go-forward activities,” the company said.
Navient $120 million settlement : Allegations Against Navient
The CFPB filed a lawsuit against Navient in 2017, accusing the student loan servicer of steering borrowers into expensive forbearance programs instead of offering them more affordable income-driven repayment plans. The CFPB also alleged that Navient misapplied payments, provided inaccurate information about repayment options, and ignored borrower complaints.
