Navient borrowers begin receiving payments from consumer watchdog case
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Signage is seen on the offices of Navient in Wilmington, Delaware, U.S., June 9, 2021. REUTERS/Andrew Kelly
WASHINGTON, Feb 17 (Reuters) - Borrowers allegedly harmed by the educational loan finance company Navient are beginning to receive payments from a $100 million compensation fund created by the top U.S. consumer financial watchdog, according to the agency's website.
The start of redress payments comes more than a year after President Donald Trump effectively put the U.S. Consumer Financial Protection Bureau on ice, causing consumer advocates to say that hundreds of millions in payments stemming from enforcement actions under the prior administration were in jeopardy.
Representatives for the CFPB and Navient did not immediately respond to requests for comment outside regular business hours on Tuesday.
In 2024, Navient accepted a ban from servicing federal student loans and agreed to pay $120 million, including $100 million in compensation, to resolve CFPB allegations it had harmed millions of borrowers. The agency said Navient caused borrowers to pay more in interest by steering them into delaying repayments even when they qualified for affordable repayment plans.
The company said at the time it disagreed with the allegations.
According to the CFPB website, a third-party consultancy began issuing victim compensation payments on February 13.
Mike Pierce, a former CFPB official and head of the advocacy organization Protect Borrowers, said in a statement the administration's actions had delayed payouts for more than a year, while giving the industry a "free pass" despite mounting student borrower defaults.
(Reporting by Douglas Gillison in Washington; Editing by Michael Perry)
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