Navient's Long-Awaited Compensation: A Closer Look

Major Student Loan Player Starts Compensation Following CFPB Settlement

Navient, a key player in the student loan industry, has commenced sending payments to borrowers allegedly wronged by the company. This follows the establishment of a $100 million fund by the U.S. consumer financial watchdog.

Payments Begin Over a Year After CFPB Freeze

The payments started rolling out in February, over a year after the Trump administration froze the Consumer Financial Protection Bureau (CFPB). Consumer advocates have raised concerns about the delay, arguing that the freeze put hundreds of millions of dollars in compensation at risk.

The CFPB and Navient have not yet responded to requests for comment.

2024 Settlement and Allegations

In 2024, Navient agreed to a settlement with the CFPB. The company agreed to stop servicing federal student loans and pay $120 million, with $100 million allocated directly to borrowers. The CFPB alleged that Navient had been steering borrowers into repayment plans that cost them more in interest, even when they qualified for more affordable options. Navient has maintained that they do not agree with these allegations.

Criticism of the Delay

The CFPB website states that a third-party consultancy began issuing payments to affected borrowers on February 13. Mike Pierce, a former CFPB official and head of the advocacy group Protect Borrowers, criticized the delay. He stated that the administration's actions had postponed payouts for over a year, effectively giving the industry a "free pass" while student borrower defaults continued to rise.