Navient Settlement 2024: Who Qualifies for $120 Million Relief?

• You may qualify for compensation if Navient steered you into forbearance or mismanaged your loan payments.

• You don’t need to take any action to receive compensation—the CFPB will automatically send checks to eligible borrowers.

• You should monitor your loan account closely with your new servicer to ensure payments and forgiveness programs are handled correctly.

In September 2024, the Consumer Financial Protection Bureau (CFPB) settled with Navient, a once-major U.S. student loan servicer. Navient is banned from servicing federal Direct Loans and must pay $120 million in penalties and relief for affected borrowers.

For years, Navient made serious errors that caused borrowers to accumulate thousands of dollars in additional interest and lose progress toward forgiveness programs. The company also exaggerated the credit score improvements borrowers could expect when getting federal loans out of default and misinformed them about the requirements to release cosigners from private loans. This settlement aims to address these harmful practices and provide financial relief to affected borrowers.

CFPB Director Rohit Chopra described the action: “Today, we are closing the book on Navient –– one of the worst offenders in the student loan servicing industry, a company that has harmed millions of borrowers across the country. Today’s proposed order will permanently ban Navient from directly servicing federal Direct Loans and deliver $100 million to the borrowers they harmed.”

Here’s what to know:

• Who qualifies? Borrowers who were victims of forbearance steering (e.g., put into long-term forbearance instead of an income-driven repayment plan) or experienced payment processing mismanagement may qualify for part of the $100 million redress. Navient’s handling of loans, particularly through payment processing errors and forbearance steering, resulted in higher fees and interest for borrowers.

• What do you need to do? In most cases, you won’t need to take any action to receive compensation. The CFPB will automatically send checks to affected borrowers. Watch out for scams claiming you need to pay for relief. Visit the CFPB website, consumerfinance.gov, to verify settlement information.

• When can you expect relief? The CFPB indicated eligible borrowers will receive checks in the coming months.

Navient has faced legal action before.

This settlement is part of a broader history of legal actions against Navient. Since taking over from Sallie Mae, the company has paid over $2 billion in previous settlements related to mishandling student loans. Many resulted from the U.S. Department of Education and state attorneys’ actions.

Related:

• Navient Student Loan Forgiveness

• Art Institutes Student Loan Forgiveness

• Borrower Defense to Repayment Forgiveness

• Biden-Harris Student Loan Forgiveness Update

If you were a federal student loan borrower steered into forbearance instead of an income-driven repayment plan or experienced payment mismanagement or credit reporting issues, you may qualify for financial relief under the Navient settlement.

Here’s a breakdown of the borrower categories eligible for part of the $100 million in redress:

• Borrowers steered into forbearance: If you were guided into forbearance instead of an IDR plan, causing your interest to accrue and payments to increase, you may qualify for redress.

• Borrowers with misallocated payments: Navient mishandled payments for borrowers with multiple loans, leading to late fees, interest accrual, and negative credit reporting. If this happened to you, you could be eligible for compensation.

• Borrowers with credit reporting issues: Navient harmed the credit scores of disabled borrowers, including veterans, who had received a loan discharge due to total and permanent disability. If your credit was impacted by Navient’s errors, you may qualify for relief.

• Borrowers misled about cosigner release: Navient told private loan borrowers that if they paid down their loans in a certain way, they could apply for their cosigners to be released.

If you qualify for the Navient settlement, the CFPB will distribute the payouts automatically to affected borrowers.

• When will payouts start? The CFPB said checks will be mailed to eligible borrowers in the next few months.

• How will payments be sent? Relief payments will be mailed via check. You don’t need to provide additional information or pay fees to receive your payment. Be cautious of potential scams claiming otherwise.

• How to verify your check: If you receive a check in the mail and you’re unsure if it’s legitimate, you can visit the CFPB’s Payments by Case page or contact the payments administrator listed for your case. If anyone asks you for money upfront in exchange for a check, it could be a scam. You can reach the CFPB for verification by calling (855) 411-2372.

• How much will you receive? The amount of financial relief each borrower receives will depend on the extent of the harm they experienced due to Navient’s illegal practices. More information on specific amounts will be available as the payout process continues.

What If You Don’t Receive a Payout?

If you believe you qualify for the settlement but haven’t received a check within the specified timeframe, visit the CFPB’s website for more details or to check your eligibility status. You can also call (855) 411-2372 to speak with the CFPB directly.

The Navient settlement marks the end of the company’s role in federal student loan servicing, but the problems borrowers have faced are far from over. Navient transferred its federal loan portfolio to new servicers, including Maximus (operating as Aidvantage) in 2021 and MOHELA in 2024. Unfortunately, many borrowers continue to report the same issues they experienced with Navient.

• Who will service your loans now? If your loans were previously serviced by Navient, they have been transferred to either Maximus/Aidvantage or MOHELA. These companies are now responsible for managing your loans, including processing payments, handling repayment plans, and overseeing loan forgiveness programs.

• Will my loan experience improve with MOHELA or Maximus? Despite hopes that the shift away from Navient would lead to better service, complaints persist with both MOHELA and other servicers. Borrowers continue to report issues such as lost paperwork, incorrect payment allocations, and delays in processing loan cancellations.

• Does the Navient settlement affect my private loans? The Navient settlement does not impact private student loans. If you have private loans still serviced by Navient, you will need to continue working with them or any other servicer managing those loans. Related: Navient Private Student Loan Forgiveness

• What should I do if I’m still facing issues? If you’re experiencing problems with your new loan servicer, file a complaint with the CFPB or your state attorney general’s office. Stay informed about your rights as a borrower, and keep detailed records of any communications or issues you encounter.

Navient may no longer be servicing federal student loans, but the broader systemic issues in the student loan industry remain. The shift to MOHELA or Maximus has not led to significant improvements for many borrowers, so stay proactive in managing your loans and seeking help if needed.

Whether you qualify for the Navient settlement or are just dealing with the transfer of your loans to a new servicer, there are some important steps you can take to stay on top of your student loan situation:

1. Update your contact information: If your loans have been transferred from Navient to a new servicer, make sure your contact details are up to date with the new servicer. This ensures you receive all important communications about your loans, including repayment schedules and updates on your account.

2. Review your repayment plan: Double-check that you’re enrolled in the right repayment plan for your financial situation. Whether it’s an income-driven repayment (IDR) plan or another option, it’s important to ensure that your payments are affordable and aligned with your long-term financial goals.

3. Monitor your loan account closely: Keep an eye on your loan account after the transition. Look out for any errors, such as incorrect payment amounts, missing payments, or issues with loan forgiveness programs. If you spot any problems, reach out to your servicer immediately to resolve them.

4. Consider other relief options: If you don’t qualify for the Navient settlement or are struggling with your loan payments, there are other relief options available. Explore income-driven repayment plans (IDR), Public Service Loan Forgiveness (PSLF), or other debt relief programs.

5. File complaints if necessary: If you experience issues with your new loan servicer, such as long wait times or miscommunication, file a complaint with the CFPB or your state’s attorney general office. Keeping a paper trail of your communications can help protect your rights.

6. Seek legal advice: If you feel you’ve been wronged and need further assistance, consulting with a legal professional may be a good idea. You can pursue additional legal action if necessary, and receiving a payout from the settlement doesn’t prevent you from doing so.

Related: Does Navient Settle Student Loans?

The 2024 settlement with the CFPB is the latest legal action against Navient for improper loan servicing practices. Over the past decade, Navient has faced lawsuits and settlements related to misleading borrowers, improper handling of loan repayments, and other violations. Below is a summary of Navient’s major legal settlements and their financial impact on borrowers:

If you’re affected by the Navient settlement or simply navigating the complexities of student loans, understanding your options is crucial. Whether you’re wondering if you qualify for financial relief or are concerned about ongoing issues with your servicer, staying proactive about managing your loans is key to avoiding further challenges.

Still have questions? Our team of student loan experts is here to help. If you’re unsure about the settlement, your eligibility, or what steps to take next, consider booking a call to speak with one of our experienced professionals. We can guide you through the process and help you better understand your situation, so you can make informed decisions about your student loans.