US bans Navient from servicing federal student loans
CNN
A federal regulator said Thursday that it is banning Navient from servicing federal student loans and ordering the company to pay $120 million.
A federal regulator said Thursday that it is banning Navient from servicing federal student loans and ordering the company to pay $120 million. The agreement settles a lawsuit brought by the Consumer Financial Protection Bureau in 2017, which claimed the company misled student loan borrowers and processed their payments incorrectly. At the time, Navient – which was previously spun off from servicer Sallie Mae – was one of the biggest companies contracted by the Department of Education to service federal student loans. The embattled loan servicer gave up its contract with the government and its 6 million federal student loan accounts in 2021, after facing a number of other legal and enforcement actions. Navient agreed in 2022 to a $1.85 billion settlement with several state attorneys general that claimed the company engaged in unfair practices. Previously, in 2014, the Department of Justice and the Federal Deposit Insurance Corporation ordered Navient and Sallie Mae to pay a total of almost $100 million for illegally overcharging nearly 78,000 military service members. As a result of the new settlement announced Thursday, $100 million will go to impacted borrowers, who can expect to receive a check from the CFPB. Eligible borrowers are not required to take any action. Navient will also pay a $20 million fine to the federal agency.
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