Investing.com -- Shares of Navient (NASDAQ:NAVI) were down 1.1% in pre-open trade on Thursday after the Consumer Financial Protection Bureau (CFPB) filed a proposed order that could reshape the company’s role in the student loan servicing market.
The CFPB's order would impose a permanent ban on Navient from servicing federal Direct Loans and restrict its ability to handle most loans under the Federal Family Education Loan Program (FFELP).
Under the terms of the order, Navient will be required to pay a $20 million penalty and provide $100 million in redress to affected borrowers.
The CFPB’s investigation also revealed Navient’s failures in payment processing, mishandling cosigner release promises, misleading disabled borrowers, and tarnishing credit reports.
Navient’s long-standing pattern of regulatory violations includes a 2022 $1.85 billion settlement with 39 states for predatory lending and steering practices.
"By banning the notorious student loan giant from federal student loan servicing and ensuring the winddown of these operations, the CFPB will finally put an end to the years of abuse,” said CFPB’s Director Rohit Chopra in a statement.
This content was originally published on Investing.com
