Student Loan Borrowers Get Relief: Navient Pays $120M in Settlement
WASHINGTON, United States –Student loan borrowers across the U.S. are receiving automatic payments from a $120 million federal settlement with Navient, one of the nation’s former largest loan servicers, finalized by the Consumer Financial Protection Bureau in 2024. The agreement, addressing allegations that Navient steered thousands of struggling borrowers into costly forbearance options rather than affordable income-driven repayment plans, began distributing checks on February 13, 2026, in Washington, D.C., with funds reaching harmed individuals without requiring claims.
Fast Facts
- Settlement Amount: $120 million total, including $100 million in direct relief to affected student loan borrowers and $20 million in civil penalties to the CFPB.
- Eligibility Criteria: Applies to federal student loan borrowers serviced by Navient who were directed into forbearance in 2017 or earlier, leading to unnecessary interest accrual.
- Payment Range: Checks vary from $100 to $2,000 per borrower, distributed automatically via mail by Rust Consulting.
- Broader Impact: Navient is permanently banned from federal student loan servicing, marking a shift in industry accountability amid $1.83 trillion in national student debt.
This settlement arrives at a critical juncture for student loan borrowers, who collectively shoulder $1.83 trillion in debt as of late 2025, according to Federal Reserve data. With average federal balances at $37,056 per borrower and delinquency rates spiking to 25% under recent economic pressures, the Navient case underscores systemic flaws in loan servicing that exacerbate financial strain. It signals heightened regulatory scrutiny, potentially paving the way for reforms in how servicers guide repayment, especially as 43 million Americans navigate options like income-driven plans amid rising costs in education and living expenses.
Settlement Reached
The CFPB’s action stemmed from a 2017 lawsuit accusing Navient of violating consumer protection laws through deceptive practices.
Navient, based in Herndon, Virginia, allegedly prioritized forbearance—a temporary pause on payments where interest accrues and capitalizes—over income-driven repayment (IDR) plans that adjust bills based on earnings and family size, sometimes reducing them to zero.
This steering, the CFPB claimed, was “cheaper and simpler” for Navient but cost borrowers millions in extra interest.
In a 2024 statement, Navient denied wrongdoing but agreed to the terms to resolve “decade-old issues,” calling it a “positive milestone” in its corporate transformation.
The order, entered in September 2024, required Navient to exit federal servicing entirely.
Payments, managed by Rust Consulting, target those harmed, with no impact on outstanding loan balances.
Borrowers must continue repayments with current servicers like MOHELA or Aidvantage, where Navient transferred accounts post-2021.
Official Statements
CFPB Director Rohit Chopra stated: “Navient’s failures cheated borrowers out of affordable options, forcing them to pay more than necessary.”
Navient’s response emphasized compliance: “We disagree with the allegations but are focused on forward activities.”
Borrower Experiences
Reddit threads and consumer reports highlight varied payouts, with some receiving $260 averages from prior state settlements, while others report up to $2,000 here.
One borrower shared: “It covers a fraction of the extra interest, but it’s validation.”
Eligibility Criteria
Affected student loan borrowers include those with federal loans under Navient’s oversight who entered forbearance pre-2018.
No application needed; notifications went out earlier, and checks are mailed directly.
If missed, contact Rust at 1-800-711-8418 or navient_info@rustcfpbconsumerprotection.org (mailto:_info@rustcfpbconsumerprotection.org).
Eligibility excludes private loans unless tied to specific misconduct.
Roughly 100,000 borrowers qualify, per expert estimates from higher education analyst Mark Kantrowitz.
Payment Distribution
Disbursement started February 13, 2026, with ongoing mailings.
Amounts depend on harm extent, calculated via accrued interest from improper steering.
The $100 million fund ensures equitable allocation.
Navient’s Role
Navient serviced over $300 billion in loans at its peak, handling 12 million accounts. Its practices drew scrutiny for misallocating payments and credit reporting errors. The settlement bans Navient from acquiring or servicing most Federal Family Education Loans or Direct Loans.
Previous Controversies
Navient, spun off from Sallie Mae in 2014, faced multiple probes.
In 2014, as part of Sallie Mae, it paid $97 million for overcharging military members.
A 2022 multistate settlement with 39 attorneys general required $1.85 billion in relief for deceptive practices.
That deal canceled $1.7 billion in private debt and paid $95 million in restitution.
States like Pennsylvania, Washington, and California led, alleging unfair origination.
Navient’s federal contract ended in 2021, transferring 6 million accounts.
The CFPB suit followed, focusing on forbearance steering.
CEO Jack Remondi oversaw the period, with the firm denying claims but settling to pivot.
Timeline of Events
- 2014: Navient forms from Sallie Mae split.
- 2017: CFPB sues over servicing failures.
- 2021: Federal contract terminates.
- 2022: $1.85 billion state settlement.
- 2024: CFPB finalizes $120 million order.
- 2026: Payments begin February 13.
Industry Context
Navient’s exit reflects broader shifts; it now focuses on private loans via MOHELA partnerships.
Controversies included denying relief for predatory school loans, per a 2024 congressional probe.
Sen. Elizabeth Warren’s investigation revealed improper denials for borrowers from fraudulent for-profits like ITT Tech.
Broader Student Debt Landscape
U.S. student debt hit $1.833 trillion in Q3 2025, per Education Data Initiative.
Federal portion: $1.693 trillion, held by 42.8 million.
Private debt: $167 billion.
Average debt: $37,056 federal; $42,673 including private.
Delinquency surged to 25% in 2025, per The Century Foundation, with 7.9 million entering delinquency.
Defaults reached 9 million borrowers, owing $208 billion.
Gen Z and Millennials delay milestones: 32% postpone homebuying, per Fidelity’s 2026 study.
Employees with debt have 30% lower retirement savings.
For-profit grads average $43,000 debt, often for undervalued degrees.
Black borrowers hold disproportionate loads: average $52,000 vs. $32,000 for whites.
Women carry two-thirds of total debt.
Economic Ramifications
High debt locks millions out of economy, reducing spending and mobility.
Delinquencies destroy credit, barring homeownership or business starts.
Trump-era policies exacerbated issues, with defaults spiking post-pause.
Regulatory Evolution
CFPB’s action sets precedent for stricter oversight.
Other servicers like Nelnet face similar scrutiny.
Biden-Harris reforms canceled $50 billion via related actions.
What’s Next
Navient’s ban ensures no federal return, shifting portfolios to compliant servicers.
Borrowers may see improved guidance, with emphasis on IDR enrollment.
Upcoming: ED’s One-Time Adjustment in 2026 credits forbearance toward forgiveness.
SAVE plan ends via 2025 settlement; borrowers transition to Repayment Assistance Plan (RAP) by July 2026.
RAP requires 30 years for forgiveness but offers benefits like interest subsidies.
Parent PLUS holders must consolidate by July 1, 2026, for IDR access.
Delinquency crisis may prompt more relief; watch for PSLF expansions.
Servicers must reform, potentially reducing steering incidents.
Borrowers: Monitor accounts via StudentAid.gov; apply for IDR if eligible.
If in default, rehabilitate loans to avoid garnishment.
Private loan holders: Explore refinancing or school misconduct discharges.
Industry: Expect consolidation among servicers, with MOHELA gaining share.
Fallout includes potential lawsuits if payments delay.
Frequently Asked Questions (People Also Ask)
Who qualifies for Navient settlement payments?
Federal student loan borrowers steered into forbearance by Navient before 2018 qualify automatically; no claim needed.
How much will I get from the Navient settlement?
Payments range from $100 to $2,000, based on harm from extra interest.
What if I haven’t received my Navient check?
Contact Rust Consulting at 1-800-711-8418; checks started mailing February 13, 2026.
Does the settlement forgive my student loans?
No, it provides compensation but doesn’t reduce balances; continue repayments.
What are income-driven repayment plans?
IDR ties payments to income and family size, offering forgiveness after 20-25 years.
How can U.S. borrowers check eligibility for other relief?
Use the Federal Student Aid Loan Simulator on StudentAid.gov for IDR, PSLF options.
What options exist for private student loans?
Refinance for lower rates or apply for misconduct discharge if from predatory schools.
The Navient settlement delivers targeted relief to student loan borrowers amid a $1.83 trillion crisis, reinforcing accountability in servicing.
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