Navient to face US student loan ban, pay $120 million to resolve CFPB lawsuit (updated)

Navient

12/09/2024 14:31

(Adds settlement details, background, paragraphs 1, 3-4, 6-7)
       Sept 12 (Reuters) - A U.S. regulator on Thursday said it
is banning Navient  NAVI.O  from servicing federal student
loans, removing the company from a market it once led, and
ordered the company to pay $120 million for years of student
lending failures.
    The U.S. Consumer Financial Protection Bureau said the ban
would prevent Navient from servicing federal direct loans, and
from directly servicing or acquiring most loans under the
Federal Family Education Loan Program.
    Navient was accused of steering borrowers into delaying loan
repayments even if they qualified for repayment plans based on
their incomes, causing them to pay more in interest, because it
was cheaper and simpler for the Herndon, Virginia-based company.
        The CFPB also faulted Navient for making mistakes in
processing payments, and misleading borrowers about their
rights.
  
    Thursday's settlement would resolve a lawsuit filed by the
CFPB in Scranton, Pennsylvania in January 2017, and requires a
judge's approval.
    The payment includes $100 million of restitution for
consumers, and a $20 million civil fine.
    Formerly known as Sallie Mae, Navient had been the largest
U.S. student loan servicer when the lawsuit began, handling more
than $300 billion of federal and private student loans for over
12 million borrowers, the CFPB said.
        
  

 (Reporting by Jonathan Stempel in New York; Editing by Chizu
Nomiyama)
 ((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))