What Navient’s Recent Student Loan Settlement Means For Borrowers

Earlier this month, former student loan servicer Navient reached a landmark $120 million settlement with the Consumer Financial Protection Bureau (CFPB) after years of legal wrangling.

The event finally marks the end of Navient’s controversial role in servicing federal student loans and brings financial relief for anyone who had to deal with the company’s mismanagement.

Let’s break down the settlement’s details, who qualifies for compensation, and what to expect going forward.

What Led To The Settlement?

The Navient settlement stems from a long list of complaints and legal actions.

After a detailed investigation by the CFPB, findings showed that Navient tricked thousands of borrowers into paying more interest instead of using income-driven repayment (IDR) plans. This led many borrowers to take on more debt and run their credit scores into the ground.

To make matters worse, this company has been involved in similar lawsuits for over a decade.

Just think about the thousands of students who trusted this company only to lose money and end up with a massive pile of debt.

How Navient’s Settlement Affects Borrowers

Thankfully, it seems like Navient’s days of misleading borrowers are coming to an end.

Under the settlement terms, the company needs to distribute $100 million to borrowers to address the financial harm the company caused borrowers. The CFPB and state attorneys general are finally holding Navient responsible for their actions and permanently banning it from servicing student loans again.

While the financial compensation might not seem like much, the CFPB’s actions could serve as a potential warning for loan servicers that try to do this to borrowers in the future.

Who’s Eligible For Compensation?

So, who qualifies for a settlement check? You might be eligible if you fit one of these four categories:

Borrowers mislead into forbearance: If you’re stuck with higher payments and interest rates after Navient wrongly placed you in long-term forbearance, you could qualify.
Borrowers misled on cosigner release: Navient gave borrowers incorrect information on how to release their cosigner. You might be entitled to financial relief if the company did this to you.
Borrowers with payment mismanagement issues: Navient was notorious for mishandling payments for borrowers with more than one loan, leading to late fees and other financial penalties. You may be eligible for a settlement check if you experienced this during your time with them.
Borrowers with credit reporting issues: Navient’s negligence affected the credit scores of borrowers with disabilities, including veterans with loan discharge eligibility. These borrowers may also qualify for compensation.

When Should You Expect Relief?

The best part of this settlement is you don’t need to do anything to get compensation.

The CFPB will automatically send checks to eligible borrowers in the coming months. If you qualify for the settlement, you can expect your check to arrive in the mail. And while there’s still no set date, the CFPB is trying to pay eligible borrowers as soon as possible.

Keep an eye on your mail and watch out for scams during this time.

The CFPB will never ask you to give personal information or pay anything to get your redress. Anyone who does is probably a scammer trying to exploit the situation.

Who Will Take Over My Loans?

What’ll happen to the old loan accounts now that Navient’s gone for good?

If the company has previously managed your loans, they’ll transfer to a new servicer. The most common ones taking over Navient’s loan portfolio are Maximus (operating as Aidvantage) and MOHELA.

There is hope that these servicers will be better than their predecessors. Unfortunately, it’s common for borrowers to experience issues with these new companies, including late payments and poor customer service.

Check your student loan accounts to ensure the company processes your payments correctly and fix any issues as they come up.

The Bottom Line

After years of delays, the Navient settlement gives borrowers some much-needed relief.

While the settlement may not completely erase their financial challenges, it’s a step in the right direction for holding loan servicers accountable for their unethical practices.

Remember to closely monitor your mailbox these next few months if you qualify for this settlement!