Navient Settlement Exposes Irregularities in Student Loan Servicing
Navient Settlement Overview
Navient is barred from federal student loan servicing, obligating them to pay $120 million in fines and compensation to borrowers impacted by their mismanagement. The proposed settlement with the Consumer Financial Protection Bureau (CFPB) was announced recently and comes nearly eight years after a lawsuit against Navient, formally known as Sallie Mae, was initiated.
Details of the Settlement
The CFPB investigation found that Navient directed borrowers into costlier repayment plans rather than more affordable income-based options. This misdirection affected many borrowers negatively, prompting the CFPB to take action.
Compensation Breakdown
- The settlement includes $100 million distributed among affected borrowers.
- An additional $20 million will be paid as fines.
- This settlement resolves litigation that began in 2017 in federal court in Pennsylvania.
Impact on Borrowers
Navient managed payments for over 12 million student loan borrowers, making these irregularities particularly concerning. Mismanagement of payment processing specifically hurt disabled borrowers whose loans had been discharged. This decision signals a commitment to holding financial services accountable.
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.