Student Loan Relief is Arriving: What Navient Borrowers Need to Know
Millions of student loan borrowers are beginning to receive payments as part of a settlement with Navient, stemming from allegations of widespread misconduct. The Consumer Financial Protection Bureau (CFPB) secured the settlement, which includes $100 million in direct relief to affected borrowers and a $20 million civil penalty.
The CFPB’s Case Against Navient: A History of Misconduct
The CFPB’s lawsuit, initially filed in 2017, accused Navient – formerly known as Sallie Mae – of engaging in unfair and abusive practices that harmed student loan borrowers. Specifically, the CFPB alleged Navient steered borrowers toward forbearance instead of potentially more beneficial income-driven repayment plans. This practice increased borrowers’ overall debt burden.
Other allegations included misleading borrowers about income-driven repayment recertification requirements, misapplying loan payments, and providing inaccurate information to credit reporting agencies regarding borrowers with disabilities. The CFPB also claimed Navient deceived borrowers about cosigner release options and credit score improvements.
Did you know? Navient voluntarily stopped servicing most federal student loans in 2021, and the CFPB ban makes this change permanent.
Who is Eligible for a Payment and How Will it Arrive?
If Navient was your federal student loan servicer, you may be eligible for a payment. The CFPB will mail checks directly to eligible borrowers, and no action is required to receive the funds. Information about the payments, and instructions for those who believe they are entitled to a payment, are available on the CFPB website.
For questions regarding the settlement, borrowers can contact Rust Consulting, the administrator, via:
- Call: 1-800-711-8418
- Email: [email protected]
- Mail: CFPB v Navient, P.O. Box 2561, Faribault, MN 55021-9561
What Does the Ban on Servicing Mean for the Future?
The settlement permanently bans Navient from servicing Direct Loans, federal student loans made directly by the Department of Education. Navient is also prohibited from acquiring or servicing FFEL loans in the future. This follows a previous settlement with 39 state attorneys general, requiring Navient to pay $1.85 billion in relief.
In February 2024, Navient transferred servicing of its entire FFEL loan portfolio, consisting of almost 3 million borrowers, to MOHELA.
The Rise of MOHELA and the Changing Landscape of Student Loan Servicing
The shift of millions of borrowers to MOHELA highlights a broader trend: a consolidation of student loan servicing. As larger companies like Navient exit the market due to regulatory pressure and financial considerations, smaller, non-profit servicers like MOHELA are taking on a larger role. This transition isn’t without challenges, as MOHELA has faced criticism regarding customer service and administrative issues.
Increased CFPB Scrutiny and the Future of Loan Servicing
The CFPB’s aggressive action against Navient signals a heightened level of scrutiny for all student loan servicers. The agency is likely to continue focusing on issues such as accurate loan information, responsible forbearance practices, and effective communication with borrowers. This increased oversight could lead to further settlements and stricter regulations in the future.
FAQ: Navient Settlement and Student Loan Servicing
- Do I need to apply for a payment? No, the CFPB will mail checks to eligible borrowers automatically.
- What if I think I’m eligible but haven’t received a check? Contact Rust Consulting, the settlement administrator, for assistance.
- What types of loans are covered by the settlement? The settlement covers borrowers who had loans serviced by Navient.
- Is Navient still servicing federal student loans? No, Navient is banned from servicing most federal student loans.
Pro Tip: Regularly check your credit report for inaccuracies, especially if you’ve had student loans in the past. You can obtain a free copy of your credit report from each of the major credit bureaus annually at AnnualCreditReport.com.
Have questions about your student loans or the Navient settlement? Share your thoughts in the comments below!
