A settlement agreement has been reached in the Navient student loans lawsuit, marking a significant development for borrowers affected by the company's practices.
The lawsuit, which was filed in 2017, alleged that Navient engaged in deceptive and unfair conduct in the servicing of student loans.
Borrowers who were affected by Navient's practices may be eligible for relief under the settlement agreement.
The agreement requires Navient to pay $1.85 billion to settle the lawsuit, with $1.7 billion going towards debt relief for affected borrowers.
Navient Student Loans Lawsuit Settlement
Navient, once one of the country's largest student loan servicers, has reached a $120 million settlement with the Consumer Financial Protection Bureau (CFPB).
The settlement includes a $20 million penalty and $100 million in relief to those impacted borrowers. The CFPB will mail checks to eligible borrowers, who do not need to take any action at this time.
Navient misled student loan borrowers in several ways, including misleading them about income-driven repayment plans and botching payment processing.
The company also harmed the credit of disabled borrowers, including severely injured veterans, and deceived borrowers about Navient's requirements for cosigner release.
Navient serviced loans for more than 12 million borrowers and roughly $300 million in federal and private student loans.
The company announced it would no longer service federal student loans in July 2021.
In 2022, Navient reached a deal with 39 state attorneys general and agreed to cancel $1.7 billion in student loan debts owed by roughly 66,000 borrowers.
As part of that settlement, Navient agreed to pay $95 million for states to offer affected borrowers some reimbursement – roughly $260 each to 350,000 borrowers.
Navient does not agree with the CFPB's allegations, but the company says the settlement is consistent with its "go-forward activities."
Settlement Details
The $120 million settlement with the Consumer Financial Protection Bureau (CFPB) is a significant development for Navient's past actions.
Navient will pay a $20 million penalty as part of the settlement.
The CFPB will mail checks to eligible borrowers, who do not need to take any action at this time.
The company will provide $100 million in relief to those impacted borrowers.
A detailed report by the CFPB alleged that Navient violated multiple laws, including the Consumer Financial Protection Act, the Fair Credit Reporting Act, and the Fair Debt Collection Practices Act.
The CFPB claims that Navient misled and harmed student loan borrowers in several ways, including:
- Misleading borrowers about income-driven repayment plans
- Botching payment processing
- Harming the credit of disabled borrowers, including severely injured veterans
- Deceiving borrowers about Navient’s requirements for cosigner release
- And, misleading borrowers about improving credit scores and the consequences of federal student loan rehabilitation
Navient was one of the largest companies contracted by the U.S. Department of Education to service federal student loans.
Announcement by Mark Brnovich
Mark Brnovich, the Attorney General of Arizona, announced a lawsuit against Navient Corporation, a student loan servicer.
The lawsuit alleged that Navient had engaged in deceptive and unfair practices, including failing to provide accurate and timely information to borrowers.
Navient was accused of prioritizing profits over borrowers' needs, leading to financial harm for many students.
As a result of the lawsuit, Navient agreed to pay $1.85 billion to settle the claims.
Frequently Asked Questions
Do I qualify for the Navient lawsuit if I?
You may qualify for the Navient settlement if you were a federal student loan borrower who was steered into forbearance instead of an income-driven repayment plan. Check if you also experienced payment mismanagement or credit reporting issues for more information.
How do I know if I'll get a check from Navient?
You'll receive a postcard from Rust Consulting to confirm your eligibility for a payment, which will be sent by mail in mid-2022 if you're eligible. Check your mail for the postcard to see if you're getting a payment.
Will I receive money from Navient settlement?
You may be eligible for compensation if Navient mismanaged your loan payments or steered you into forbearance. The CFPB will automatically send checks to eligible borrowers, so no action is required.
Is Navient permanently banned from servicing student loans?
Navient is permanently banned from servicing federal student loans. The company reached a $120 million settlement with the CFPB due to its past practices.
Do I still have to pay Navient student loans?
Yes, you still have to pay your Navient student loans, but the company is in the process of transferring its portfolio to MOHELA, which may affect your loan servicer in the future.
Sources
- https://www.doj.state.wi.us/news-releases/ag-kaul-announces-185-billion-settlement-student-loan-servicer-navient
- https://www.azag.gov/press-release/attorney-general-mark-brnovich-announces-185-billion-settlement-student-loan-servicer
- https://health.wusf.usf.edu/2024-09-12/navient-reaches-120-million-settlement-for-misleading-student-loan-borrowers
- https://www.regulatoryoversight.com/2022/01/thirty-nine-state-ags-reach-a-1-85-billion-settlement-with-student-loan-servicer-navient/
- https://guardianlit.com/debt-relief-news-sallie-mae-now-navient-settles-and-now-1-7-billion-in-student-loans-to-be-forgiven/
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