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student loan giant Navit The company revealed to CNBC that it has reached a $120 million settlement with the Consumer Financial Protection Bureau over its practices against student loan borrowers.
The CFPB sued Navient in 2017 for misleading borrowers and provide them with bad newscausing many people to pay more than they need to.
The consumer watchdog also accused Navient of steering student loan borrowers into paying expensive deferment fees, resulting in many paying high interest rates.
Additionally, the CFPB alleged that Navient miscalculated borrower payments and tainted the credit reports of disabled borrowers, including severely injured veterans.
At that time, the lender was Largest student loan servicer Manages the accounts of over 12 million people in the United States.
Navient stopped servicing government federal student loans in 2021.
Navient still has the private student loans of about 3.7 million people, although another servicer, Mohela, will soon service those accounts.
The company’s shares were up more than 3% before trading opened Thursday morning.
As part of the settlement, Navient said it will use $100 million to make payments to affected customers based on the CFPB’s decision.
The remaining $20 million will be transferred to the CFPB’s Civil Penalty Fund.
Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra speaks during a hearing in Washington, DC, United States, Thursday, May 9, 2024.
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“For years, Navient executives made huge profits by exploiting students and taxpayers,” CFPB Director Rohit Chopra said in a statement.
“By banning notorious student loan giants from servicing federal student loans and ensuring the winding down of these operations, the CFPB will finally end years of abuse,” Chopra said.
Navient sees the agreement as a positive step for the company.
“This agreement puts these decade-old issues behind us,” a Navient spokesperson said in a statement to CNBC. “While we disagree with the CFPB’s allegations, this resolution is consistent with our future activities, This is an important positive milestone in our company’s transformation.”
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