The Consumer Financial Protection Bureau last week said it had reached a $120 million settlement with student loan giant Navient that could lead to compensation for hundreds of thousands of borrowers.
The CFPB accused Navient of steering student loan borrowers into expensive forbearances, miscalculating their bills and tarnishing their credit reports. Under the terms of the settlement, Navient is banned from servicing federal student loans ever again.
A Navient spokesperson said the company disagreed with the consumer watchdog’s charges.
As part of the deal, $100 million will be used to make payments to impacted customers, as determined by the CFPB. The remaining $20 million will go to the CFPB’s civil penalty fund.
Here’s what to know about the bureau’s upcoming relief.
Who may qualify for the checks
The CFPB has not spelled out who will be eligible for the consumer redress, explained higher education expert Mark Kantrowitz.
Still, “there are some clues in the settlement,” about who might receive the checks, he said.
Borrowers may not need to apply for relief
“It is likely that eligible borrowers will be identified automatically,” Kantrowitz said.
That means borrowers shouldn’t have to do anything to get the compensation.
The CFPB also warned people not to fall for scams during this time.
“The CFPB will never require consumers to pay money to obtain redress, nor will we ask for additional information before consumers can cash a redress check that we’ve issued,” the bureau wrote.
