100K US Student Loan Borrowers Could Receive Checks Upto $2K From Federal Loan Servicer After CFPB Settlement
Approximately 100,000 US student loan borrowers may receive checks up to $2,000 due to a CFPB settlement with Navient over misleading forbearance practices.Summary
Following a $120 million settlement with the Consumer Financial Protection Bureau (CFPB) over allegations of steering borrowers into costly forbearances, former federal loan servicer Navient is distributing payments to eligible borrowers. Higher education expert Mark Kantrowitz estimates at least 100,000 borrowers will receive checks, ranging from $100 to $2,000, administered by Rust Consulting. The CFPB alleged Navient provided borrowers with inaccurate information and failed to address complaints, leading to higher interest charges and financial hardship. Consumer advocate Julia Barnard emphasized the importance of these payments in helping borrowers recover from the harm caused by Navient’s misconduct.
Navient, once the largest student loan servicer in the US, is now prohibited from handling federal education loans as a result of the settlement, though it remains active in the private student loan market. The payments began in February, over a year after concerns arose that the Trump administration’s actions had delayed payouts from enforcement actions.
The article highlights the financial implications of forbearance, where interest continues to accrue on outstanding debt, potentially adding thousands of dollars to a borrower’s balance over time. It suggests that borrowers are often better served by choosing an affordable repayment plan.
(Source：International Business Times)