Navient's $1.85 Billion Settlement for Student Loan Servicing Abuse

Navient Corporation, one of the largest student loan servicers in the United States, was accused of systematically failing the borrowers it was supposed to help. The CFPB and multiple state attorneys general alleged that Navient engaged in years of abusive practices affecting millions of student loan borrowers.

Instead of helping struggling borrowers enroll in income-driven repayment plans — which could have significantly reduced their monthly payments — Navient steered them into forbearance. While forbearance temporarily pauses payments, interest continues to accrue, dramatically increasing the total amount owed. For Navient, forbearance was easier and cheaper to process than income-driven repayment, which required more staff time.

The result was devastating for borrowers. Many saw their loan balances balloon even as they thought they were receiving help. Some borrowers who should have qualified for loan forgiveness programs were never informed of their options. Others had their payments processed incorrectly, leading to late fees and damaged credit scores.

The case highlighted how the student loan servicing industry's profit incentives were fundamentally misaligned with borrowers' interests — servicers were paid the same regardless of whether they provided good or bad service, and cutting corners saved them money while costing borrowers thousands.