Navient's $100 Million Settlement: What It Means for Student Loan Borrowers
Understanding the Federal Settlement
The Consumer Financial Protection Bureau (CFPB) and Navient have reached a tentative agreement that mandates the student loan servicer, Navient, to pay $100 million back to borrowers and prohibits them from servicing federal student loans in the future. This settlement, which remains subject to court approval, responds to allegations that Navient misled borrowers into costly repayment plans.
Allegations Against Navient
- Steering Borrowers Away from Affordable Options: The CFPB accused Navient of pushing borrowers towards forbearance instead of more affordable income-driven repayment plans.
- Resulting Financial Burden: This strategy allegedly led to borrowers incurring higher interest charges.
- Payment Processing Errors: Navient was also criticized for misallocating payments, which caused late fees and further financial difficulties for borrowers.
Implications for Borrowers
This settlement signifies a potential turning point for those affected by Navient's previous servicing practices. While Navient disputes the CFPB's findings, the settlement indicates a commitment to rectify past mismanagement.
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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.