Navient Student Loan Borrowers May Qualify for Relief Under $120 Million Settlement

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In a significant development for student loan borrowers, Navient has agreed to a $120 million settlement with the U.S. Consumer Financial Protection Bureau (CFPB). This settlement aims to provide relief to hundreds of thousands of borrowers who were misled or improperly serviced by Navient, one of the largest student loan servicers in the country.

Background of the Settlement

Per the report, CFPB has accused Navient of several malpractices, including steering borrowers into costly forbearances, miscalculating bills, and providing inaccurate information about repayment options. These actions led to unnecessary financial burdens for many borrowers, tarnishing their credit reports and causing undue stress.

Details of the Settlement

Under the terms of the settlement, Navient will have to pay $120 million, with $100 million allocated to compensate impacted borrowers and $20 million going to the CFPB’s civil penalty fund. This agreement also permanently bans Navient from servicing federal student loans, marking a significant shift in the student loan servicing landscape.

Who Qualifies for Relief Under The Settlement

The CFPB has not yet detailed the exact criteria for eligibility, but there are some indications of who might qualify. Borrowers who were serviced by Navient, including those from Sallie Mae, may be eligible. If you're not sure who your federal student loan servicer is, you can find out at Studentaid.gov. In 2021, Navient announced that it was transferring its federal student loan accounts to Maximus Aidvantage. Specific issues that could qualify borrowers for relief include being charged fees to enter forbearance, receiving multiple late fees for a single delayed payment, and being steered into interest-accruing forbearances without being informed of more affordable repayment options.

How to Receive Compensation

Eligible student borrowers will likely be identified automatically by the CFPB, meaning they won’t need to take any action to receive their payments. The process of identifying and compensating eligible borrowers is expected to take several months.

This settlement represents a significant victory for student loan borrowers who have struggled under Navient’s practices. It also underscores the importance of regulatory oversight in protecting consumers from unfair practices. All student loan borrowers impacted by this decision can look forward to some financial relief and a step towards rectifying the issues they face.

For more information, borrowers can visit the CFPB’s website or contact their current loan servicer to understand how this settlement might affect them.