Student loan borrowers to get checks from Navient settlement
Some student loan borrowers can soon expect a check in the mail, more than a year after the Consumer Financial Protection Bureau made a decision. $120 million settlement with the old federal servant Navient.
The CFPB said Navient steered student loan borrowers away from affordable repayment plans and into expensive forbearance, causing many to pay high interest fees.
“People faced real consequences — delaying kids, not being able to buy a home or going back to school when they wanted, and more,” said consumer advocate Julia Barnard, who was the CFPB’s top student loan official when the settlement was announced.
“These checks are necessary and will help make debtors whole after the harm they have suffered as a result of Navient’s misconduct.”
At the time of the settlement, a spokesman for Navient said it disagreed with the CFPB’s allegations.
Navient at some point largest student loan provider It manages the accounts of more than 12 million people in the United States. As part of the settlement, the CFPB barred the company from using federal student loans, although it continued to play a role in the private student loan market.
More than 42 million Americans have student loans and outstanding debt $1.6 trillionAccording to the Congressional Research Service.
Here’s what debtors need to know about settlement compensation.
Qualified borrowers are those who are tolerant
If you have a federal student loan with Navient and your account was placed in forbearance in 2017 or earlier, you may be eligible to receive a check, higher education expert Mark Kantrowitz said.
Over the years, the U.S. Department of Education has transferred many borrowers one or more times between student loan servicers. You should be able to find a record of the companies managing your debt at: studentaid.gov. Navient’s federal student loan accounts were initially transferred to Mohela and may have later been transferred to Aidvantage, Nelnet or EdFinancial.
Cate Fitzgerald, a spokeswoman for Navient, responded to a question about the settlement payments this week: “The CFPB is responsible for administering the funds and identifying the borrowers who will receive them under our agreement.”
The CFPB did not respond to a request for comment. On its website, the Bureau directs consumers with questions about settlement compensation to call third-party payment administrator Rust Consulting at 1-800-711-8418 or email navient_info@rustcfpbconsumerprotection.org.
At least 100,000 borrowers will receive a check
The CFPB did not share the number of borrowers who would receive compensation under the settlement. But by analyzing historical data on Navient borrowers, Kantrowitz estimates that at least 100,000 people could get a check.
The typical payout will likely be a few hundred dollars, Kantrowitz said.
Debtors on Reddit so far $2,000.
“I am happy to see that debtors are already receiving these checks to which they are entitled,” Barnard said.
Financial consequences of tolerances
When a borrower enters into forbearance, they do not have to make payments, but they generally continue to accrue interest on their loans.
As the Navient settlement shows, forbearance can be costly for borrowers. While it may be tempting to put your loan payments on hold, your balance may grow much larger, making it harder for you to repay it once the benefit period ends.
Kantrowitz found that Navient’s average loan amount coming due in March 2017 was around $43,000. That means, assuming a 6.8% interest rate, the borrower’s balance would increase by about $3,000 for each year their bills are paused, he estimated.
Debtors are better off Consumer advocates say they found a repayment plan they can afford.
