The Consumer Financial Protection Bureau is considering taking legal action against Navient Corp., the country's largest student loan servicer and a former division of Sallie Mae, after an investigation into the company's disclosures and late fees. The company disclosed the threat of legal action in a filing today.
Any legal action against Navient could be a significant blow to the company, which was spun off from the student loan giant Sallie Mae partially in an attempt to repair its battered image as a loan servicer. Last year, the two companies were ordered to pay a $60 million settlement over allegations that they had denied benefits to military service members.
The threat of legal action against Navient is part of a broader probe into student loan servicing practices nationwide by the CFPB. Last month, the regulator ordered Discover Bank to pay $18.5 million for illegal student loan practices, saying that the company had overstated minimum amounts due, withheld important information, and harassed borrowers with calls at all hours of the day.
The language in Navient's disclosure is stronger than one earlier this month by Citigroup, which said that it was "subject to a regulatory investigation" into its student loan practices. Citigroup did not specify which regulator was investigating the company.