Navient Banned from Student Loan Servicing, Fined $120 Million

Federal regulator says loan servicer abused student borrowers for years

A major servicer of federal student loans has been banned from future loan servicing and fined $120 million due to years of abusive practices that harmed borrowers.

The Consumer Financial Protection Bureau (CFPB) banned loan servicer Navient from the federal student loan program and ordered the fine.

“For years, Navient’s top executives profited handsomely by exploiting students and taxpayers,” said CFPB Director Rohit Chopra. “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.”

The CFPB's order notes that Navient abused borrowers by steering them to more costly repayment options and denying them opportunities to enroll in income-driven repayment plans. The moves meant handsome profits for Navient at the expense of borrowers.

The order requires Navient to pay $100 million to harmed borrowers and a $20 million civil penalty. The ban on servicing direct loans and other types of federal loans essentially shuts Navient out of the federal student loan market.

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