Here's which Navient student loan borrowers may qualify for relief under $120 million settlement
The Consumer Financial Protection Bureau reached a $120 million settlement with Navient that may lead to compensation for hundreds of thousands of borrowers
The Consumer Financial Protection Bureau last week said it had reached a $120 million settlement with student loan giant Navient that could lead to compensation for hundreds of thousands of borrowers.
The CFPB accused Navient of steering student loan borrowers into expensive forbearances, miscalculating their bills and tarnishing their credit reports. Under the terms of the settlement, Navient is banned from servicing federal student loans ever again.
A Navient spokesperson said the company disagreed with the consumer watchdog's charges.
As part of the deal, $100 million will be used to make payments to impacted customers, as determined by the CFPB. The remaining $20 million will go to the CFPB's civil penalty fund.
Here's what to know about the bureau's upcoming relief.
Who may qualify for the checks
The CFPB has not spelled out who will be eligible for the consumer redress, explained higher education expert Mark Kantrowitz.
Still, "there are some clues in the settlement," about who might receive the checks, he said.
To begin, your student loan servicer has to be, or have been, Navient. Some borrowers who were serviced by the company when it was known as Sallie Mae will also qualify.
If you're not sure who your federal student loan servicer is, you can find out at Studentaid.gov. In 2021, Navient announced that it was transferring its federal student loan accounts to Maximus Aidvantage.
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Within that pool of Navient borrowers, the CFPB could look to provide relief to individuals who faced some of the issues listed below, Kantrowitz said:
- Charged fees to enter a forbearance
- Charged multiple late fees for a single delayed payment
- Were denied access their loan payment history when requested
- Received inaccurate information about the Public Service Loan Forgiveness program and their eligibility for the relief
- Steered into interest-accruing forbearances or deferments and not informed about other, potentially more affordable repayment options, including the government's income-driven repayment plans
Borrowers may not need to apply for relief
"It is likely that eligible borrowers will be identified automatically," Kantrowitz said.
That means borrowers shouldn't have to do anything to get the compensation.
The CFPB also warned people not to fall for scams during this time.
"The CFPB will never require consumers to pay money to obtain redress, nor will we ask for additional information before consumers can cash a redress check that we've issued," the bureau wrote.
This story originally appeared on: CNBC - Author:Annie Nova
