See, to be honest, if you’re one such person who has student loans, then you are probably familiar with Navient as one of the names that always pops up in student loans, correct us if we’re wrong. Well, Navient was not a sudden upstart. It is one flagpole under the very interesting name of Sallie Mae, the biggest name in the student lending circuit that came to be a big name with college debt in America. And in 2014, Sallie Mae splashed itself into two companies and Navient became the official name to guide millions of borrowers through their loans. Indulging itself with loans from over 12 million borrowers and $300 billion in federal and private loans at its height, Navient became the best student loan servicing company, you know?
Though, unfortunately, however, it did not have to be called the bad guy. Rather, complaints began pouring in as years went by from borrowers who claimed that they had been misled, overcharged, or simply ignored. You see, trouble got hot enough by 2017 that the Consumer Financial Protection Bureau decided to step in, accusing Navient of playing fast and loose with the rules and making life difficult for millions of borrowers out there, and that’s where there is this Navient Settlement CFPB Lawsuit thing in action.
What Were Navient’s Actual Claims?
The CFPB’s suit against Navient had more to do than with a few bad decisions, it involved a pattern that left borrowers worse off. One of the most significant allegations? Navient pushed borrowers into something called forbearance. Sounds harmless, doesn’t it? Not so much. Sure enough, it actually allows borrowers to temporarily suspend their loan payments, but the catch is that interest continues to accumulate in the background, and that’s not a good thing at all. So what next then? Well, in the end, then, borrowers owed a lot more than they would have had they been guided to better options.
Why would Navient do this? Simple: because it was simpler and cheaper for them. But for the borrower, it was a financial trap.
Not only that, Navient was also said to fail to describe income-driven repayment plans. Sure enough, down the line, these forms would have adjusted repayment amounts based on earnings to relieve strain on borrowers living paycheck to paycheck. But Navient kept them in the dark making the loans excessively costly. Oh, and let’s remember how they mismanaged payments, told borrowers how to release cosigners from loans, and even ruined the credit of disabled borrowers including veterans.
The Settlement? Yeah! What It Means for Borrowers
You see, fast forward to the year 2024, March, and Navient had to really face its demons, but how? Sure enough, like, after years of legal tussles, the company finally agreed to come into a settlement with the CFPB for $120 million. And in case if you’re wondering about all that, here is how it broke down: $100 million went right to borrowers who were harmed, and $20 million was slapped on as a penalty. But perhaps the greatest consequence? For this settlement, Navient cannot lend services in federal student loans forever. That is, there are no more Navients in the game of federal loans.
For borrowers who were eligible for the settlement, it was a rare moment of relief, that’s for sure. Like, they did not even have to do anything; the checks would just be sent out, according to what the CFPB promised. But while this settlement ended just one of the chapters for borrowers, it was not the only case that Navient was facing. There sure are many more.