Navient Federal Student Loans: What to Know

#1 Student loan lawyer

Updated on June 9, 2023

Last year, Navient, a prominent student loan servicer, orchestrated a significant change. In collaboration with the Education Department, Navient moved nearly all of its federal student loans to a new entity it played a part in establishing, Aidvantage.

Today, Navient’s portfolio mostly comprises private student loans and a handful of older federal loans made under the Federal Family Education Loan Program (FFELP). These loans aren’t owned by the Education Department. Instead, they are privately-held federal loans owned by guarantee agencies.

If you have FFEL Loans with Navient, there are two things you need to know:

  1. Missed Debt Cancellation Opportunity: Unfortunately, you may have missed out on the debt relief initiative introduced under President Biden’s administration.

  2. Limited Access to Forgiveness Programs: You could be at risk of losing access to key loan forgiveness opportunities, such as the Public Service Loan Forgiveness program and the unique account adjustment offering that eliminates remaining balances for those who’ve been saddled with student debt for over 20 years.

Key Takeaways

  • Navient is a financial services company providing loan servicing and asset management for federal and private loans but has faced allegations of deceptive practices.

  • Is Navient a federal loan? All FFEL Loans with Navient are federal student loans. If you were wondering, “Why are my Navient loans not paused?” it’s because your federal loans are owned by a guaranty agency — not the federal government

  • The Navient Lawsuit provides relief, compensation, and reforms for borrowers affected by the alleged unfair/deceptive loan-servicing practices with restitution payments & debt cancellation options.

  • Navient student loan forgiveness exists, but you likely will need to consolidate into a Direct Consolidation Loan to get the most relief.

Understanding Navient's Role in Federal Student Loans

Navient has been a well-known figure in the student loan industry since its inception in 2014, acting as both a loan servicer and asset manager for federal and private student loans. But recent events have shone a spotlight on Navient’s practices, raising several questions about its treatment of federal student loan borrowers.

To provide a clearer understanding of Navient’s operations, let’s dive into its history, allegations of mismanagement, and changes:

  • Origin and Early Services: Established as a spin-off from Sallie Mae, Navient commenced its operations by servicing federal student loans under the Federal Family Education Loan Program (FFELP) and private student loans from diverse lenders. Its role wasn’t just limited to servicing; Navient also acted as the owner of millions of private student loans.

  • Allegations: Navient has been accused of multiple misconducts, including failure to offer the necessary information for borrowers to make informed decisions and engaging in deceptive practices leading to overpayment by borrowers. These allegations have cast a cloud over Navient’s reputation in the industry.

  • Major Changes and Transfers: Navient experienced a considerable shift in recent years, with a large portion of its federal student loan accounts transitioning to Aidvantage. This change, however, did not cease Navient’s servicing duties completely. Navient continues to service FFEL Program loans issued by the government and owned by private lenders, along with servicing private student loans.

  • Future Outlook: Despite past controversies and shifts in loan servicing, Navient is poised to continue its role in the student loan industry. It remains to be seen how it navigates the challenges and upholds its responsibilities in the years to come.

Related: Who Took Over Navient?

The Navient Settlement: Key Points and Implications

The Navient settlement was the result of numerous lawsuits launched by the Massachusetts Attorney General, other states, and the Consumer Financial Protection Bureau (CFPB). Navient was accused of violating consumer protection laws and engaging in unfair and deceptive loan servicing and collection practices. This settlement has been fully executed as of last summer.

Here are three things you should know:

  1. Legal Actions and Allegations: Navient faced a barrage of legal actions that culminated in a settlement with 39 state attorneys general. The company was required to pay $1.85 billion, which included $1.7 billion in debt cancellation and restitution payments for eligible federal loan borrowers. It was alleged that Navient used unfair and deceptive practices, such as steering borrowers toward forbearance instead of income-driven repayment plans, thus increasing the financial burden on borrowers.

  2. Settlement Outcomes: The settlement was designed to provide relief and support for affected borrowers. Approximately $1.7 billion in subprime private student loan balances were dismissed, and $95 million in restitution was allocated for borrowers impacted by Navient’s alleged predatory practices. Navient was required to complete these actions by July 2022.

  3. Impact on Navient’s Practices: As part of the settlement, Navient is now legally obligated to change its practices and enhance transparency. These changes are expected to ensure fair and honest conduct and to improve debt collection operations and loan servicing processes.

But it’s important to note a few points about the Navient settlement:

  • Focus of the Settlement: The settlement was primarily designed to address Navient’s private student loan practices. Consequently, if you’re still holding private loans with Navient, that debt remains your responsibility. The settlement applied specifically to subprime loans in default, not all loans.

  • Relief Disqualification: An important clause in the settlement stipulated that relief only applied to borrowers in default. This meant that borrowers who managed to keep up with payments on their high-interest loans—often acquired to attend for-profit schools of dubious value—were disqualified from relief.

  • Potential for Further Legal Action: The Navient settlement does not exclude borrowers from pursuing further legal action against the company if they believe it to be necessary.

In the context of Navient’s involvement with federal student loans, this settlement brought about significant changes. But what does it mean for borrowers with federal loans? We’ll explore that in the next section.

Benefits from the Settlement for Eligible Borrowers

  • Restitution Payments: Eligible federal loan borrowers, including those whose loans have been transferred to Aidvantage, could receive restitution payments as part of the Navient settlement.

  • Claiming Restitution: A significant part of the Navient settlement, $95 million, was allocated as restitution for federal loan borrowers who were inappropriately steered into forbearance instead of an income-driven repayment plan. Affected individuals could request restitution by submitting a claim form to Navient.

  • Additional Relief and Consolidation: Beyond restitution payments, borrowers might have had access to other relief options such as loan consolidation and loan forgiveness. Consolidation, in particular, could increase the chance of being included in any future broad student loan cancellation.

For those carrying private loans with Navient, the settlement had provisions for possible debt cancellation. But the relief applied only to those with subprime loans in default.

Recognizing Your Loan Servicer and Navigating Aidvantage

  • Identifying Your Loan Servicer: Know who your loan servicer is. You can find this out by logging into your account at or by contacting the Federal Student Aid Information Center at 1-800-433-3243. This is the company you’ll interact with to manage and repay your loans.

  • Navigating the Transition to Aidvantage: If your loan has been transferred from Navient to Aidvantage, adapt to the new environment. Download and store your payment history, update your contact information, and familiarize yourself with their system.

  • Proactive Loan Management: Keep an open line of communication with your servicer and stay updated about any changes in their policies or procedures. Regularly review your billing statements to ensure that you’re on the right repayment plan and your payments are correctly applied. This approach will help you make informed decisions about your repayment options and any available financial resources.

  • Preparing for Post-COVID-19 Relief: Remember that the COVID-19 emergency relief measures — the interest rate freeze and federal student loan payment pause — are set to conclude this summer. Now is the time to contact your servicer and understand what your monthly payment will be when the forbearance period ends. This proactive engagement can make your transition to regular payments smoother and more predictable.

Resources and Support for Student Loan Borrowers

The student loan landscape can be complex to navigate. Luckily, there are plenty of resources available to you if you need assistance or have concerns about your Navient loans:

  • Federal and National Resources: Institutions like the U.S. Department of Education and the National Foundation for Credit Counseling offer rich resources on student loan rights, responsibilities, and repayment options.

  • Specialized Help for Borrowers: Websites such as Student Loan Borrowers Assistance and The Institute of Student Loan Advisors provide targeted guidance for borrowers, including details on financial aid and insights into managing loans.

  • Filing Complaints: If you face issues with your student loan servicer or want to raise a complaint, the Federal Student Aid Ombudsman, CFPB, and your state’s attorney general are the appropriate channels.

  • Direct Assistance from Navient and External Support: Navient offers help to its borrowers, but you can also explore resources from non-profit organizations, student loan counselors, and lawyers specializing in student loans.

Leveraging these resources and standing up for your rights can ensure you get the support and assistance needed for successful student loan management.

Holding federal loans serviced by Navient can open the door to various loan forgiveness programs. But you may first need to consolidate your FFEL Loans into a Direct Consolidation Loan to become eligible. Here’s a snapshot of some forgiveness programs:

  • Public Service Loan Forgiveness: A federal program designed for those working in public service. After 120 qualifying payments under an approved repayment plan, you could have your remaining student loan balance forgiven.

  • Temporary Expanded Public Service Loan Forgiveness: This program offers a limited window for borrowers who’ve made payments under PSLF to have any remaining loan balance forgiven.

  • Income-Driven Repayment Forgiveness: Offers forgiveness for borrowers using income-based repayment options. The Education Department is also in the process of implementing the IDR Waiver. This unique program gives borrowers credit for their time spent in different student loan repayment plans, including IDR plans, long forbearance periods, and some deferment periods.

  • Teacher Loan Forgiveness: Specifically for teachers working in low-income schools.

  • State-Based Forgiveness Programs: These vary by state but can provide additional forgiveness opportunities.

  • Borrower Defense to Repayment: Available to students misled by their school or whose schools engaged in misconduct violating certain state laws.

To leverage benefits from PSLF, IDR forgiveness, and other programs, you must first consolidate your Navient federal loans into a Direct Consolidation Loan. You can apply for this online at, and no credit check is required. The fixed interest rate on the consolidated loan will be a weighted average of the rates on your existing loans.

As part of the consolidation process, you can select a new servicer and a repayment plan that reduces your monthly payments. After submitting your application, contact Navient to request a forbearance on your next payment. This allows you to save some money while waiting for the consolidation to be processed.

How to Lower Navient Federal Student Loan Payments

When grappling with student loan payments, it’s crucial to be aware of all options available to you. Consolidating your loans can potentially provide access to a wider range of repayment and forgiveness plans. But it might not always be the best route for every borrower.

Choosing to Consolidate

Consolidating your Navient federal loans into a new Direct Consolidation Loan can unlock access to programs such as Public Service Loan Forgiveness and various Income-Driven Repayment plans. This might prove particularly beneficial if your financial situation aligns with these programs’ eligibility criteria.

Opting Not to Consolidate

On the other hand, you might choose not to consolidate, especially if you plan to pay off your loans entirely and are concerned about interest capitalization.

When you consolidate, unpaid interest on your existing loans is added to your principal balance, resulting in potentially higher overall interest costs. So, if you anticipate repaying your full loan balance, not consolidating could save you money in the long run.

Other Repayment Options

If you opt not to consolidate, various repayment plans can potentially lower your monthly payments on your Navient federal loans:

  • Extended Repayment Plan: This plan allows you to extend your loan term up to 25 years, effectively lowering your monthly payments.

  • Graduated Repayment Plan: Ideal if you expect your income to rise in the future, this plan starts with lower payments that gradually increase over time.

  • Income-Driven Repayment Plans: These plans will give you the lowest monthly payment amounts by adjusting your payments based on your income and family size, offering potentially more manageable payments.

  • Income-Sensitive Repayment Plan: Exclusively for FFEL Loans, the ISR calculates your monthly payment based on your annual income.

Your specific financial circumstances will guide you toward the most suitable course of action for managing your student loan payments. By fully understanding each choice and its implications, you can make a more informed decision that best aligns with your financial situation and goals.

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Can Navient federal loans be forgiven?

Yes, Navient federal loans may be forgiven under certain circumstances, such as meeting requirements for the Public Service Loan Forgiveness Program or making 20 years of payments.

Does Navient service federal student loans?

No, Navient ceased servicing federal student loans owned by the U.S. Department of Education as of January 2022. These loans are now serviced by Aidvantage.

Who now services Navient's federal student loans?

Navient's federal student loans were taken over by Aidvantage, the loan servicing division of Maximus Education, as approved by the Biden administration in 2021.

Is Navient loan forgiveness possible?

Yes, Navient federal loans can potentially be forgiven based on your repayment plan and tenure. FFEL Loans and loans under an IBR plan may qualify for forgiveness.