Navient Banned from Student Loan Servicing, Promising $100 Million in Compensation
Navient's Federal Loan Servicing Ban
Navient, the erstwhile king of student loan servicing, now faces a bleak future as it is banned from handling federal student loans. As part of a proposed settlement with the Consumer Financial Protection Bureau (CFPB), Navient must compensate affected borrowers to the tune of $100 million.
Background of Legal Troubles
- The CFPB initiated a lawsuit against Navient nearly eight years ago, citing systematic mismanagement.
- Allegations include directing borrowers into more expensive repayment plans while neglecting lower-cost options.
- The settlement ends litigation that commenced in 2017 in federal court.
Details of Compensation
With this settlement, Navient will disperse approximately $100 million among hundreds of thousands of borrowers, alongside $20 million in fines.
INCIDENTALLY, Navient previously oversaw over 12 million borrowers, which makes the impact of this ruling all the more significant.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.