Navient Student Loan Servicing Review And Lawsuits

Navient used to be one of the largest student loan servicing companies in the United States. However, by the end of 2024, it will have exited it's entire student loan portfolio.

In fact, the Department of Education and CFPB recently announced that Navient will be banned from Federal loan servicing.

Were your student loans handled by Navient? If so, you may be wondering what this means for you and where you can find your student loans. You also may be wondering if you're eligible for any type of Navient student loan forgiveness settlements.

Here's what you need to know about Navient student loans, where to find your loans today, and what you might be eligible for.

Who Is Navient Student Loan Servicing?

Navient was a student loan servicer that was formed after the 2014 Sallie Mae split.

Navient was previously one of the largest student loan servicing companies in the United States -  servicing over $300 billion of government and private student loans. However, by the end of 2024, it will have $0 in student loans.

In 1972, Sallie Mae was established as a government-sponsored enterprise (GSE). It was later privatized in 2004 when Congress terminated Sallie Mae’s federal charter. Sallie Mae was a loan servicer for two federal student loan programs: the Direct Loan Program and the Federal Family Education Loan Program. In 2014, Sallie Mae was divided in two parts: the consumer banking business, which is known as Sallie Mae, and the student loan servicing operations, which became Navient. 

Where Did My Navient Loans Move To?

All of Navient's federal student loans were transferred to the loan service Aidvantage. If you have federal student loans with Navient, your loans are now located there. You can find your loans on StudentAid.gov as well.

If you had privately-held FFEL loans or private loans that were serviced by Navient, the remaining loans are moving to MOHELA.

What You Need To Know About The Navient Lawsuits

According to a lawsuit filed by the CFPB, Navient has been faced with allegations of misallocating payments, steering people into costly plans, and supplying the wrong information when borrowers pleaded for help with high monthly payments. Some of the allegations against Navient include misapplied payments, surprise late fees, processing delays, and misrepresentation of repayment options and repayment amounts.

Some of the allegations against Navient include misapplied payments, surprise late fees, processing delays, and misrepresentation of repayment options and repayment amounts. The CFPB and the state attorneys general are all seeking financial redress for borrowers they say were harmed by Navient’s actions.

“The lawsuits are full of deeply disturbing allegations,” said Rohit Chopra, senior fellow at the Consumer Federation of America and the former student-loan point man at the CFPB. “If this is true, then the company’s actions may be responsible for some of the pileup of defaults that we’ve seen in recent years.”

Navient Allegedly Forced Borrowers Into Forbearance

Even more disturbing allegations say that Navient incentivized employees to encourage borrowers to postpone payments through forbearance, an option in which interest continues to accrue, rather than guide borrowers down the correct path and enroll them in an income-driven repayment plan that would avoid fees.

CFPB alleges that Navient racked up $4 billion in interest charges to the principal balances of borrowers who were enrolled in multiple and consecutive forbearances from January 2010 to March 2015.

CFPB further alleges Navient misled borrowers about the terms of renewing enrollment in income-driven repayment plans that limit monthly bills to a percentage of earnings, and also over reporting the loan discharge of disabled borrowers to the credit bureaus. The complaint further alleges that Pioneer Credit Recovery, a subsidiary of Navient, made illegal misrepresentations about the federal loan rehabilitation program available to defaulted borrowers.

The CFPB Lawsuit Is Not The Only Lawsuit Against Navient

In addition to the CFPB’s allegations, Illinois Attorney General Lisa Madigan and Washington Attorney General, Bob Ferguson, also filed separate lawsuits. Navient was the subject of a multiyear investigation, which reviewed its business practices, which uncovered the issues that led to the lawsuits.

Illinois and Washington allege that Navient and its former parent company Sallie Mae provided “risky and expensive” subprime private student loans that carried high interest rates and fees. Madigan notes that the loans were mostly provided to students enrolled in for-profit colleges.

Past Lawsuits Involving Service Members and Disabled Veterans

This is not the first time Navient has had issues with regulators. The Justice Department fined the company millions of dollars for unlawfully charging active-duty service members high interest rates and late fees on student loans, violations that the company called “processing errors.”

That case escalated to a dispute between congressional Democrats and the Education Department, which revealed that Navient charged some military personnel more than 6% interest as permitted by law. Erroneous reports of loan discharge also result in adverse tax consequences, because the loan discharge amount is treated as income. 

Sen. Elizabeth Warren (D-Mass.), a longtime critic of Navient, said the CFPB’s lawsuit “could help put money back in the pockets of thousands of borrowers, including disabled veterans who have been harmed by this company’s repeated law breaking.”

Navient's Response

Navient claims that the lawsuit is politically motivated, and denied all allegations. In a statement, Navient contends that the standards the CFPB are using to reach its conclusions are “inconsistent” with the Education Department’s regulations. 

How Do The Navient Lawsuits Affect My Student Loans?

Whether Navient is your student loan service provider or not, you should get up to speed on all the options that are available to you today.

First, you may have already been told that you are locked into high monthly payments believing there is no other option. But you may have options to minimize fees, reduce your monthly payments, or lower your interest rate. Read our article on income-based repayment plans and repayment options to see if you have a better potential solution.

If your student loan servicing provider inaccurately report missed or late payments to the credit bureau, these mistakes will have an adverse impact on your credit report. Make sure that you are actively disputing items that are incorrect on your credit report. We recommend using a free service like Credit Karma to monitor your credit and help you take action if things aren't correct.

Am I Entitled To Damages From The Navient Lawsuit?

Maybe. About 350,000 private student loan borrowers who were steered towards long-term forbearance will be receiving a total of $95 million in restitution from Navient. That works out to about $260 per borrower. If you're one of the borrowers who are eligible for restitution, Navient says that you should be notified by mail in the spring of 2022.

Update from the editor: On January 13, 2022, it was announced that Navient had reached a settlement for its lawsuits from 38 states and will cancel $1.7 billion of student debt for 66,000 private student loan borrowers. An additional 350,000 borrowers who were placed in long-term forbearance with Navient will receive about $260 each in restitution (for a total of $95 million).

Where Can I Get More Help For My Navient Student Loans?

If you’re struggling with Navient and you're not quite sure what to do, consider hiring a CFA to help you with your student loans. We recommend The Student Loan Planner to help you build a solid financial plan for your student loan debt. Check out The Student Loan Planner here.

If you have a strong credit score and income, you may want to consider refinancing your student loans away from Navient. It doesn't always make sense to refinance Federal student loans into private loans. But, for some people, it could save them a lot of money in interest charges.

You can pursue student loan refinancing in a variety of ways, but I recommend looking using Credible -- a student loan refinancing marketplace. With Credible, you can receive offers from multiple lenders after filling out one short form. It’s free and you can get an estimate of how much you can save by refinancing in less than a minute.

For more extreme cases, contact the Consumer Financial Protection Bureau. If you want to file a formal complaint regarding your federal loan service or a private student loan, such as a loan issued by a bank, credit union, or school. The CFPB oversees financial services companies and enforces federal consumer financial laws. 

Final Thoughts

Just because Navient has left the student loan servicing marketplace, you still need to take action to repay your student loans.

While your student loan servicer is there to help you understand your available options for student loan repayment, you must do your due diligence to explore all of your options.

We are here to help you make decisions that will lead you towards financial freedom. Be sure to check out our Definitive Guide To Student Loan Debt.