Navient Settlement Overview
Who: Student loan servicer Navient Corp. has agreed to a $120 million settlement to resolve a lawsuit filed by the Consumer Financial Protection Bureau (CFPB) in 2017.
Why: The settlement addresses allegations related to Navient's alleged predatory practices in handling student loans.
Where: The settlement was reached in a Pennsylvania court but will benefit borrowers nationwide.
Navient agreed to pay $120 million to resolve claims that it directed borrowers into costly forbearance programs instead of informing them about available income-driven repayment options. The lawsuit also alleged that Navient provided inadequate counseling and misinformation regarding repayment plans, leading to unnecessary interest accumulation.
The settlement also resolves accusations that Navient applied payments incorrectly and neglected client complaints, according to settlement documents.
Settlement Details
As part of the Navient settlement, the company will pay $100 million to affected borrowers and a $20 million fine.
Future Operations
Navient is banned from buying or servicing federal student loans. As of July 2024, all government contracts and existing student loans will be outsourced or transferred to third-party organizations.
CFPB Director Rohit Chopra stated, “For years, Navient’s top executives profited handsomely by exploiting students and taxpayers. By banning the notorious student loan giant from federal student loan servicing and ensuring the winddown of these operations, the CFPB will finally put an end to the years of abuse.”
Related Lawsuit
In 2021, investors filed a class action lawsuit against Navient, alleging that the company artificially inflated stock prices and misled investors, which resulted in a significant drop in stock value and financial losses.
Case Information
The Navient student loan settlement concludes the case of Consumer Financial Protection Bureau v. Navient Corporation, et al., Case No. 3:17-cv-00101-RDM, in the District Court for the Middle District of Pennsylvania.
