Navient, a loan servicing company based in Delaware, will pay $120 million in fines and be prohibited from most of the federal student loan market following a settlement with the Consumer Financial Protection Bureau.
Navient will no longer offer servicing services under the Direct Loan program and it was barred from servicing or buying most loans from the Federal Family Education Lending Program.
The company agreed to pay the CFPB a $20 million penalty and set aside $100 million to compensate borrowers harmed by its practices.
The settlement puts to rest a CFPB investigation that began in 2017 and led to litigation. The bureau had claimed that Navient regularly steered delinquent borrowers into forbearance instead of enrolling them in more-affordable government repayment plans.
CFPB Director Rohit Chopra said the company’s actions had resulted in millions of borrowers needlessly defaulting on their student loans.
Navient also settled with several state attorneys general in 2022, agreeing to forgive $1.7 billion of debt and make $95 million available for distribution to borrowers wrongfully steered into forbearance.