Navient banned from federal student loan servicing, will pay borrowers $100 million in compensation.

Navient is barred from federal student loan servicing and has to pay $120 million in fines and compensation to the borrowers harmed by its practices, according to a proposed settlement with the Consumer Financial Protection Bureau.

The accord announced Thursday comes nearly eight years after the CFPB sued Navient, formally known as Sallie Mae. Navient directed student loan borrowers into more costly repayment plans and away from lower-cost income-based choices, an investigation by the CFPB found. Navient is looking at paying $100 million to be dispersed among hundreds of thousands of borrowers and $20 million in fines. 

The proposal brings an end to litigation initially filed by the federal watchdog in 2017 in federal court in Pennsylvania. The company was then the country's biggest servicer of student loans, overseeing more than 12 million borrowers, noted the CFPB. The loan-servicing giant allegedly mismanaged payment processing, hurting the credit of disabled borrowers whose loans had been discharged, the agency contended.