The Consumer Financial Protection Bureau (CFPB) ordered Navient to pay $120 million in September 2024, consisting of $100 million in direct restitution to harmed borrowers and a $20 million civil penalty. However, there’s no verified $285 million loan cancellation associated with this CFPB action.
This settlement addresses widespread misconduct where Navient illegally steered struggling federal student loan borrowers into forbearance instead of income-driven repayment plans, costing them years of credit toward loan forgiveness. Additionally, a separate 2022 settlement with state attorneys general resulted in $1.7 billion in private student loan debt cancellation for approximately 66,000 borrowers. This article explains what the CFPB settlement actually covers, who qualifies, when payments are being distributed, and what changed for Navient going forward.
Table of Contents
- What Did the CFPB Actually Order Navient to Do?
- The Harm That Led to This Settlement
- Don’t Confuse This With the 2022 Debt Cancellation Settlement
- Who Qualifies for the CFPB Settlement?
- Timeline: When Are Payments Being Made?
- What Changed for Navient After This Settlement
- Broader Context: Increasing Enforcement Against Student Loan Servicers
What Did the CFPB Actually Order Navient to Do?
In September 2024, the cfpb announced an enforcement action against Navient that resulted in a $120 million settlement. Of this amount, $100 million goes directly to borrowers who were harmed by Navient’s steering practices, while $20 million is paid as a civil penalty to the CFPB. The settlement also includes a permanent ban on Navient servicing federal Direct Loans—meaning Navient can no longer service new loans for the federal government.
This is a significant sanction because federal loan servicing is a major revenue source for student loan companies. What made this settlement notable was not loan cancellation but rather restitution for specific harm: Navient steered borrowers away from income-driven repayment (IDR) plans and into forbearance, which paused payments but didn’t count toward the 20 or 25-year forgiveness timeline under Public Service Loan Forgiveness or income-driven repayment plans. This meant borrowers lost years of potential forgiveness credit.
The Harm That Led to This Settlement
Between 2009 and 2016, Navient engaged in a pattern of deceptive practices targeting federal loan borrowers experiencing financial hardship. When borrowers contacted Navient about managing their loan payments, company representatives failed to mention income-driven repayment plans as an option and instead directed borrowers into forbearance or deferment. These tools might sound helpful, but they have a critical drawback: forbearance pauses interest accrual on some loans but does not count toward forgiveness programs that require 240 payments (20 years) or 300 payments (25 years).
A borrower who was steered into forbearance for two years instead of an income-driven plan could lose two years of progress toward forgiveness, potentially delaying their loan forgiveness by years. The CFPB found that Navient was aware of income-driven repayment plans, knew they were better options for struggling borrowers in many cases, and deliberately withheld this information. The agency also found that Navient failed to correct errors in borrowers’ accounts and made false statements about loan programs. This wasn’t oversight—it was systematic misconduct designed to keep borrowers making payments longer.
Don’t Confuse This With the 2022 Debt Cancellation Settlement
In September 2022, Navient agreed to a $1.7 billion settlement with 39 state attorneys general. This separate settlement resulted in actual debt cancellation: approximately $1.7 billion in private student loans were cancelled for around 66,000 borrowers. These borrowers had attended for-profit colleges with low graduation rates or poor employment outcomes. This was a different settlement addressing different misconduct—in this case, Navient’s role in financing predatory for-profit college education.
The two settlements can be confusing because they both involve Navient and both provide financial relief, but they address different problems and affect different groups of borrowers. The 2022 state settlement focused on debt cancellation for private loan borrowers harmed by attending failing institutions. The 2024 CFPB settlement focuses on restitution for federal loan borrowers who were steered into forbearance. If you attended a for-profit college and had Navient private loans, you might have benefited from the 2022 settlement. If you had federal loans and were steered away from income-driven repayment, you’re eligible for the 2024 settlement.
Who Qualifies for the CFPB Settlement?
You qualify for restitution from the 2024 CFPB settlement if you had a federal Direct Loan or FFEL (Federal Family Education Loan) serviced by Navient between 2009 and 2016, experienced financial hardship and contacted Navient about your options, and were not properly informed about income-driven repayment plans. The CFPB identified that Navient’s misconduct harmed borrowers in multiple ways: by steering them into forbearance, failing to correct payment application errors, and making false statements about loan terms. The CFPB did not require borrowers to apply for the settlement or submit claims.
Instead, the agency identified eligible borrowers based on records and directed Navient to send them payments and notices. The agency announced in February 2026 that payments to borrowers had begun—so if you’re eligible, you may have already received a payment or notice about your eligibility. The payments range from hundreds to thousands of dollars depending on the specific harm you suffered.
Timeline: When Are Payments Being Made?
Payments from the $120 million settlement began on February 13, 2026, according to announcements from the CFPB and reporting by major financial news outlets. Navient was ordered to send eligible borrowers notifications and payments, along with information about how much they received and why. If you were a federal loan borrower harmed by Navient’s steering practices, you should check your mail and any correspondence from Navient regarding settlement payments.
However, not all $120 million necessarily goes out as payments in 2026—settlement administration often takes time. The timeline depends on how many eligible borrowers are identified and how payments are scheduled. Additionally, some of the money goes to monitoring Navient’s future conduct and other settlement administration costs. If you haven’t received a notice by mid-2026 but believe you should be eligible, contact the CFPB directly or watch the CFPB’s official announcement page for more specific claim instructions.
What Changed for Navient After This Settlement
The most significant change is that Navient is permanently banned from servicing federal Direct Loans for the government. This is a major restriction because federal loan servicing contracts represent stable, long-term revenue. As of the settlement, Navient can no longer service new federal loans on behalf of the Department of Education.
This doesn’t mean Navient disappeared from the student loan industry entirely, but it severely limits its role. Additionally, Navient was required to implement compliance monitoring and reporting requirements. The company must implement a system to ensure it properly informs borrowers of income-driven repayment options and accurately applies payments. The CFPB will monitor Navient’s compliance with these requirements going forward.
Broader Context: Increasing Enforcement Against Student Loan Servicers
The Navient settlement is part of a broader pattern of enforcement against student loan servicers by the CFPB and federal regulators. Student loan servicing—managing payments, account information, and program eligibility—is a critical function that directly affects borrowers’ financial lives. When servicers fail to inform borrowers of better options or make errors in payment application, borrowers can lose thousands of dollars in potential forgiveness or overpay for years.
The CFPB has taken similar enforcement actions against other major servicers, including Betsy DeVos’s family company and Nelnet subsidiary affiliates. These actions signal that the federal government is prioritizing borrower protection in student loan servicing, particularly for borrowers with federal loans who are entitled to income-driven repayment and forgiveness programs. Going forward, borrowers should be more aware of their repayment options and should contact their servicer directly to confirm they’re in the right plan.