US firm settles for $120M in student lending failures

ISTANBUL

Navient Corporation, an American student loan servicer, reached a $120 million settlement with the US' Consumer Financial Protection Bureau (CFPB) amid its practices with student loan borrowers.

The CFPB said Thursday in a statement that it has filed a proposed order against Navient for its years of failures and lawbreaking.

"If entered by the court, the proposed order would permanently ban the company from servicing federal Direct Loans, and would forbid the company from directly servicing or acquiring most loans," it said.

"These bans would largely remove Navient from a market where it, among other illegal actions, steered numerous student loan borrowers into costly repayment options," it added.

The US agency said Navient illegally deprived student borrowers of opportunities to enroll in more affordable income-driven repayment plans and forced them to pay much more than they should have.

Navient would have to pay a $20 million penalty and provide $100 million in redress for harmed borrowers under the terms of the order, said the CFPB.

The Delaware-based company said Thursday in a separate statement that it is no longer a servicer or purchaser of federal student loans.

"In 2021, with the approval of the Department of Education, Navient transferred its contract to service government student loans to a third party, and earlier this year, Navient reached an agreement to outsource student loan servicing of its legacy FFELP student loan portfolios, which began on July 1, 2024," it said.

The company said it will oversee its third-party servicing provider to meet all operational terms of the agreement.