Statement: CFPB proposes to ban Navient from servicing many federal student loans

Former top student loan company would need to pay $120 million in penalties and borrower redress

WASHINGTON — The Consumer Financial Protection Bureau (CFPB) filed a proposed order on Thursday to resolve its 2017 lawsuit against Navient, previously the largest student loan servicer, for allegedly “failing borrowers at every stage of repayment” and illegally cheating borrowers out of their rights to more affordable repayment plans. 

If the court enters the proposed order, Navient would be banned from servicing federal Direct Loans and from directly servicing or acquiring most loans under the Federal Family Education Loan Program. Navient would also be required to return $100 million to affected borrowers and pay a $20 million penalty. 

Navient, which the CFPB calls “a repeat offender with a long history of regulatory violations,”  ended its servicing contract with the Department of Education in 2021 and announced in early 2024 that it would transfer its remaining loans to another servicer.

In response to the proposed order, U.S. PIRG’s Consumer Campaign Director Mike Litt released the following statement:

“Thanks to persistence and strong leadership, the CFPB is holding Navient accountable. The CFPB is showing Navient the door and making sure it won’t be able to get back into most aisles of the federal student loan market. 

“If you’re eligible for compensation, a check will be sent to you automatically. You don’t need to do anything, so beware of scammers pretending to be from the CFPB.”