Navient's New Loans: What You Need To Know

Navient is a financial services company that offers technology-enabled education finance solutions. It previously serviced federal and private student loans, but in 2021, it stopped managing federal student loans. Navient has since faced legal allegations of loan mismanagement and was banned by the Consumer Financial Protection Bureau (CFPB) from re-entering the federal student loan servicing business. As a result, Navient has been transferring its student loan portfolio, consisting of FFELP and private student loans, to other servicers like Aidvantage and MOHELA. While Navient no longer provides new federal student loans, it continues to offer a private student loan marketplace and other financial services.

Navient no longer services federal student loans

Navient, once one of the largest student loan servicers in the US, is no longer servicing federal student loans. The company stopped managing federal student loans in 2021, and its contract with the Department of Education to service Direct Loans ended in October of that year. Navient has since transferred its federal loans to Aidvantage, a new servicer.

The Consumer Financial Protection Bureau (CFPB) has permanently banned Navient from the federal student loan servicing business. The ban is the result of a seven-year legal battle, in which Navient was found to have harmed student loan borrowers in several ways. The company has been ordered to pay $120 million in restitution and penalties, with $100 million going to affected borrowers and $20 million to the CFPB's victim relief fund.

Navient has agreed to pay restitution to compensate federal loan borrowers who were placed in certain types of long-term forbearances. The company has also agreed to provide debt cancellation for certain private loan borrowers.

Navient has continued to service FFEL Program loans issued by the government and owned by private lenders, as well as serving as a private student loan lender. However, the company has announced that it will offload its private and FFELP student loan portfolio to MOHELA. This transfer is still underway, with MOHELA taking over Navient's remaining federal and private student loan portfolio.

If your federal loans were held by Navient before December 31, 2021, they have likely been transferred to Aidvantage. You can confirm your current servicer by logging into your StudentAid.gov account.

Navient's private student loan forgiveness

Navient has been involved in a number of lawsuits and settlements regarding its lending practices at for-profit schools. In 2024, Navient introduced a private loan forgiveness option for borrowers who took on high-interest loans to attend predatory for-profit schools known for misconduct. This includes schools such as the Art Institutes, ITT Tech, and Westwood College.

Navient's private loan forgiveness program, officially known as the "school misconduct discharge application", provides relief for borrowers with high-interest loans from predatory for-profit schools. The program is not part of Navient's past lawsuits or any widespread federal student loan forgiveness efforts. Instead, it aims to address predatory debt linked to fraudulent schools.

To be eligible for Navient's private student loan forgiveness program, you must meet the following criteria:

• Have unpaid loans (originally from Navient or Sallie Mae) used to attend a for-profit school known for fraudulent or misleading practices.
• Your loans must still be serviced by Navient. Refinanced or fully repaid loans typically do not qualify.
• Provide detailed information about how your school misled, defrauded, or lied to you, and how this has affected you personally.
• Include specific details such as dates, amounts owed, false job placement rates, inflated salaries, and other deceptive recruitment tactics.

If you believe you are eligible for Navient's private student loan forgiveness program, you can follow these steps:

• Obtain the School Misconduct Discharge Application by contacting Navient's Office of Consumer Advocate at (888) 545-4199 ext. 998214 or by email at [email protected].
• Alternatively, you can request the application by calling 855-545-4199, extension 998214.
• Fill out the application form thoroughly and concisely, providing specific details and supporting documentation.
• Submit your completed application to Navient by mail.

It is important to note that Navient's private loan forgiveness program is separate from its previous legal battles and settlements. Additionally, Navient is no longer servicing federal loans owned by the U.S. Department of Education. These loans have been transferred to a new servicer, Aidvantage, as of January 2022.

Navient's settlement with the Massachusetts Attorney General

Navient stopped managing federal student loans in 2021 and was permanently banned from ever re-entering the federal student loans servicing business by the Consumer Financial Protection Bureau (CFPB) in 2024. The company continues to service FFEL Program loans issued by the government and owned by private lenders, and it also serves as a private student loan lender.

In January 2022, Attorney General Maura Healey announced a $1.85 billion settlement with Navient, one of the nation's largest student loan servicers. The settlement resolved allegations of widespread unfair and deceptive student loan servicing practices and abuses in originating predatory student loans. The settlement included $1.7 billion in debt relief and $95 million in restitution, with thousands of Massachusetts borrowers receiving $41 million in private loan cancellation and $2.2 million in payments.

The settlement was led by a coalition of 39 attorneys general from states including Massachusetts, California, Illinois, Pennsylvania, and Washington, and joined by attorneys general from 29 other states and the District of Columbia.

The settlement requires Navient to reform its conduct and cease unfair and deceptive practices in servicing and collecting student loans. It includes terms to ensure Navient improves its servicing and debt collection operations. Navient has agreed to provide restitution to compensate federal loan borrowers who were placed in certain types of long-term forbearances and to cancel certain private loans.

To be eligible for private loan debt relief under the settlement, the loan must have been past due for more than seven consecutive months before June 30, 2021. The borrower's address on file with Navient as of that date must be within Massachusetts or one of the other participating states.

Navient's loan-servicing practices

Navient is a financial services company that provides technology-enabled education finance solutions to simplify complex problems and help millions of people achieve success. In addition to servicing student loans, they also provide payment processing services for businesses.

Navient was once a major servicer of federal and private student loans. However, the company faced a lawsuit from the Consumer Financial Protection Bureau (CFPB) for federal loan mismanagement and was permanently banned from servicing federal student loans in 2021. As a result of the settlement, Navient must pay $100 million in restitution to borrowers harmed by their loan-servicing practices. Qualifying federal loan borrowers will receive a check for approximately $260, and certain private loan borrowers will have their loans cancelled.

Navient borrowers can apply for private loan forgiveness if their school misled them or if they had delinquent payments for more than seven consecutive months prior to June 30, 2021. In 2022, Navient delivered $1.7 billion in debt cancellation to approximately 66,000 private loan borrowers after five years of litigation with 39 state attorneys general.

Navient has also been transferring its student loan portfolio to other servicers. As of 2024, MOHELA has taken over the servicing of Navient's private and FFELP student loans. Any remaining federal loans in the Navient portfolio were transferred to Aidvantage in December 2021.

Navient's FFELP student loan portfolio transfer to MOHELA

Navient stopped managing federal student loans in 2021. The company has said it will offload its private and FFELP (Federal Family Education Loan Program) student loan portfolio to MOHELA (Missouri Higher Education Loan Authority). This transfer is still underway and will take place in the second half of 2024.

Navient's student loan portfolio is split between private student loans and commercially held loans from the FFELP. The company holds $38 billion worth of FFELP loans and $17 billion worth of private education loans. As part of the CFPB settlement, Navient must pay $100 million in restitution to borrowers it harmed.

If Navient is your current or former student loan servicer, you should take the following steps before the transfer:

• Download and save your payment history from your online account or request a copy from your servicer.
• Update your contact information with your most recent address, phone number, and email address.

MOHELA will manage the loan portfolio, but Navient will retain ownership of it. If your federal loans were held by Navient before December 31, 2021, they were likely transferred to Aidvantage. You can confirm your current servicer by logging into your StudentAid.gov account.

Frequently asked questions