Navient Banned from Federal Student Loans, Ordered to Pay $120 Million

Featured picture for
Credit: newsbreak.com

Additional Coverage:

September 12 (UPI) — The Consumer Financial Protection Bureau (CFPB) announced on Thursday that student loan servicer Navient will no longer be allowed to manage federal direct loans and will have to pay $120 million in penalties due to years of alleged misconduct that harmed borrowers.

https://img.particlenews.com/image.php?</p> <p>url=2Cp77x_0vTxJLbI00″ width=”900″ height=”602″><figcaption>The CFPB declared on Thursday that Navient is banned from servicing federal student loans and must pay $120 million to settle a lawsuit. </p> <p>CFPB Director Rohit Chopra stated the action will end “years of abuse” by Navient. File photo by Bonnie Cash/UPI.</figcaption></p> <p>Navient is required to pay a $20 million penalty and provide an additional $100 million to compensate affected borrowers. The order also prevents Navient from servicing or acquiring most loans under the Federal Family Education Loan (FFEL) program.</p> <p>“Navient’s top executives have exploited students and taxpayers for years,” said CFPB Director Rohit Chopra. “By prohibiting this major student loan servicer from handling federal loans and winding down its operations, the CFPB aims to stop these ongoing abuses.”</p> <p>The CFPB accused Navient of illegally steering students toward costly repayment options and denying them access to more affordable plans.</p> <p>In response, Navient stated, “While we disagree with the CFPB’s allegations, this resolution aligns with our future objectives and marks an important milestone in our company’s transformation. Navient is no longer a servicer or purchaser of federal student loans.”</p> <p>Navient indicated it has transferred its government student loans to another party and has outsourced FFELP program loans earlier this year.</p> <p>Originally part of Sallie Mae, Navient was the nation’s largest student loan servicer when the CFPB sued it in 2017, alleging improper practices.</p> <p>The lawsuit claimed Navient used deceptive methods to cheat borrowers out of repayment benefits.</p> <p>“The CFPB’s lawsuit accused Navient of failing borrowers at every stage of repayment,” the statement read. “Specifically, it alleged that Navient steered borrowers who were eligible for income-driven repayment plans into forbearance, which was more cost-effective and easier for Navient but harmful to borrowers. This practice resulted in additional interest charges for many borrowers.”</p> <p>According to the CFPB, Navient violated multiple acts, including the Consumer Financial Protection Act, the Fair Credit Reporting Act, and the Fair Debt Collection Practices Act.</p> <p>U.S. Under Secretary of Education James Kvaal praised the CFPB’s efforts, saying, “I commend the CFPB for securing tangible relief for borrowers and preventing similar future failings.”</p> <hr> <h4>Read More About This Story:</h4> <p></p> <ul> <li><a href=Navient banned from federal student loans; to pay $120 million for ‘years of abuse’ (newsbreak.com)

TRENDING NOW

LATEST LOCAL NEWS

© Brightgram.com - All Rights Reserved