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Pupil mortgage large Navient has reached a $120 million settlement with the Shopper Monetary Safety Bureau over its practices with pupil mortgage debtors, the corporate tells CNBC.
The CFPB sued Navient in 2017 for allegedly misleading borrowers and offering them with bad information, inflicting many to pay greater than they wanted to.
The shopper watchdog company additionally accused Navient of steering pupil mortgage debtors into costly forbearances, inflicting many to pay steep curiosity costs.
Moreover, the CFPB alleged that Navient miscalculated debtors’ funds and tarnished the credit score reviews of disabled debtors, together with severely injured veterans.
On the time, the lender was the largest student loan servicer within the U.S., managing the accounts of greater than 12 million individuals.
Navient stopped servicing the federal government’s federal pupil loans in 2021. The lender has additionally agreed to not reenter servicing of federal pupil loans.
Navient nonetheless owns the non-public pupil loans for round 3.7 million individuals, though one other servicer, Mohela, will quickly service these accounts.
The corporate’s shares had been up greater than 5% in late-morning buying and selling Thursday.
As a part of the settlement, $100 million can be used to make funds to impacted prospects, as decided by the CFPB, Navient mentioned.
The remaining $20 million will go to the CFPB’s civil penalty fund.
Rohit Chopra, director of the Shopper Monetary Safety Bureau (CFPB), speaks throughout a listening to in Washington, DC, US, on Thursday, Could 9, 2024.
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“For years, Navient’s high executives profited handsomely by exploiting college students and taxpayers,” CFPB Director Rohit Chopra mentioned in an announcement.
“By banning the infamous pupil mortgage large from federal pupil mortgage servicing and guaranteeing the winddown of those operations, the CFPB will lastly put an finish to the years of abuse,” mentioned Chopra.
Navient framed the settlement as a constructive step for the corporate.
“This settlement places these decade-old points behind us,” a Navient spokesperson mentioned in an announcement to CNBC. “Whereas we don’t agree with the CFPB’s allegations, this decision is in line with our go-forward actions and is a vital constructive milestone in our transformation of the corporate.”
