Navient's Long-Awaited Compensation: A Closer Look

Navient, a major player in the student loan industry, has finally started sending out payments to borrowers who were allegedly wronged. This comes after a $100 million fund was set up by the U. S. consumer financial watchdog. The payments began rolling out in February, over a year after the Trump administration put a freeze on the Consumer Financial Protection Bureau (CFPB). The delay in payments has raised eyebrows among consumer advocates. They argue 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.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 going directly to borrowers. The CFPB claimed that Navient had been steering borrowers into repayment plans that cost them more in interest, even when they qualified for more affordable options. Navient, however, has maintained that they do not agree with these allegations. 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.