Student loan servicer abuse: how Navient and MOHELA failed millions of borrowers

Updated: December 2025

The companies that made student debt worse

You did everything right. You took out loans for your education, believing it would be an investment in your future. You made your payments on time, month after month, year after year. You followed the rules, filled out the paperwork, and trusted that the companies managing your loans would help you navigate the path to being debt-free.

And still, you might be paying thousands of dollars more than you should—because your loan servicer failed you.

In September 2024, the Consumer Financial Protection Bureau permanently banned Navient from servicing federal student loans and ordered the company to pay $120 million in penalties and restitution for years of systematically steering borrowers into costly forbearance programs instead of affordable income-driven repayment plans. At the time of the CFPB's original 2017 lawsuit, Navient was the largest federal student loan servicer in America, managing more than $300 billion in student debt for over 12 million borrowers.

The CFPB action followed a separate $1.85 billion settlement Navient reached with 39 state attorneys general in January 2022, which included $1.7 billion in private student loan cancellation for more than 66,000 borrowers and $95 million in direct restitution to approximately 350,000 federal loan borrowers.

Now MOHELA—the Missouri Higher Education Loan Authority, which inherited millions of Navient's borrowers—faces its own reckoning. In July 2024, the American Federation of Teachers filed a groundbreaking consumer protection lawsuit alleging that MOHELA illegally overcharged borrowers on their monthly bills, failed to process paperwork in a timely manner, and actively misled millions of people seeking Public Service Loan Forgiveness. Since 2011, the Department of Education has paid MOHELA more than $1.1 billion to do one job: help borrowers navigate their student loan options. The lawsuit alleges the company has consistently failed at this job.

Meanwhile, the SAVE plan—created in 2023 as the most affordable income-driven repayment option—has been blocked by courts and effectively eliminated by Congress. Applications for all income-driven repayment plans were taken offline in early 2025. And millions of borrowers are in limbo, watching interest accrue on their loans while making no progress toward forgiveness.

The student loan servicing industry is built on a fundamental conflict of interest. Servicers are paid by the federal government to manage borrowers' accounts, but their financial incentives often diverge from borrowers' best interests. Processing a forbearance request is cheaper and faster than helping a borrower enroll in an income-driven repayment plan. And for years, that's exactly what companies like Navient did—they chose the path that maximized their profits while costing borrowers billions in unnecessary interest.

This guide explains what went wrong, what's happening now, and how you can protect yourself.

The scale of the crisis

The numbers tell a story of systemic failure affecting tens of millions of Americans:

| Metric | Figure | |--------|--------| | Total federal student loan debt | $1.6 trillion | | Borrowers with federal student loans | 43 million | | Navient CFPB settlement (2024) | $120 million | | Navient state AG settlement (2022) | $1.85 billion | | MOHELA lawsuit damages sought | Unspecified (ongoing) | | Borrowers affected by SAVE plan chaos | 8+ million | | PSLF applications backlogged (2025) | 1.5+ million | | PSLF buyback applications pending | 65,448+ |

The human toll extends far beyond statistics. A typical borrower with $30,000 in student loans who was steered into three years of forbearance—the maximum allowed for economic hardship—paid an additional $6,742 in interest according to a 2017 Government Accountability Office study. That's money that could have gone toward paying down principal, building savings, or supporting a family. Instead, it went to pad the balance sheets of loan servicers who chose profit over people.

Navient: a decade of documented abuse

The pattern of harm

Navient's misconduct wasn't a series of isolated incidents—it was a business model. From the company's spin-off from Sallie Mae in 2014 until its ban from federal student loan servicing in 2024, Navient systematically prioritized its own financial interests over borrowers' welfare.

The most damaging practice was steering borrowers into forbearance. When borrowers called Navient struggling to make payments, customer service representatives had a choice: they could take the time to explain income-driven repayment options that would cap payments at an affordable percentage of the borrower's income, or they could quickly process a forbearance that would pause payments but allow interest to continue accruing.

A Federal Student Aid audit of Navient found the pattern in stark detail. Auditors listened to 2,388 calls between borrowers and Navient customer service representatives—calls that lasted less than five minutes. In nearly 10 percent of those calls, representatives offered borrowers only the option of forbearance, without mentioning income-driven repayment plans that would have been more beneficial. Some borrowers were offered forbearance even when they said they could make a payment within a timeframe that wouldn't incur additional costs.

The financial impact was devastating. The states that sued Navient alleged that customers enrolled in multiple consecutive forbearances from January 2010 to March 2015 had more than $4 billion in accrued interest added to their loan principal. Interest that borrowers should never have paid. Interest that could have been avoided if Navient had simply done its job.

The PSLF disaster

Public Service Loan Forgiveness was created by Congress in 2007 to encourage graduates to pursue careers in public service—teaching, nursing, government work, nonprofit employment. The promise was simple: make 120 qualifying payments while working for a qualifying employer, and the remaining balance would be forgiven.

Navient turned that promise into a nightmare for thousands of borrowers.

The problem began with basic information. Borrowers would contact Navient to express their intent to pursue PSLF and ask what they needed to do. Instead of explaining the requirements clearly—that borrowers needed Direct Loans, not FFEL loans; that they needed to be on an income-driven repayment plan; that they needed to submit employment certifications—Navient representatives gave incomplete or incorrect information.

Teachers who had worked in public schools for years discovered they didn't qualify because they had the wrong type of loan. Nurses who had made payments for a decade learned their payments didn't count because they were on the wrong repayment plan. Government employees who had diligently submitted paperwork found that their employment certifications had been lost or incorrectly processed.

When the first borrowers became eligible for PSLF forgiveness in 2017—ten years after the program's creation—the rejection rate was over 99 percent. Most rejections were due to technicalities that servicers like Navient could have helped borrowers avoid: wrong loan type, wrong repayment plan, incorrect paperwork. The program designed to reward public service had become a trap, and loan servicers were the ones who set it.

The American Federation of Teachers, representing 1.8 million educators—75 percent of whom are eligible for PSLF—sued Navient for this pattern of misconduct. The settlement required Navient to train specialists specifically to advise public service workers about PSLF requirements.

The private loan predators

Navient's misconduct extended beyond federal loans to predatory private lending. Working with for-profit colleges—institutions with dismal graduation rates and even worse job placement records—Navient originated subprime private student loans to students it knew were unlikely to ever repay.

These loans carried interest rates as high as 16 percent, with fees equal to 9 percent of the loan amount. They were marketed to students at schools like ITT Technical Institute and the Art Institutes—for-profit chains that would later collapse amid fraud allegations, leaving students with worthless degrees and crushing debt.

The 39 state attorneys general who investigated Navient concluded that the company made these risky loans as an "inducement to get schools to use Navient as a preferred lender" for more profitable federal and prime private loans. In other words, Navient used vulnerable students as pawns in a larger game of profit extraction.

The $1.85 billion settlement required Navient to cancel $1.7 billion in these predatory private loans for more than 66,000 borrowers—people who had been trapped in debt they never should have been offered in the first place.

The 2024 ban

The CFPB's September 2024 action represented the culmination of years of enforcement. The settlement permanently banned Navient from servicing federal Direct Loans and prohibited the company from directly servicing or acquiring most loans under the Federal Family Education Loan Program.

The $120 million settlement included $100 million for borrower restitution and $20 million in civil penalties. Hundreds of thousands of borrowers are expected to receive compensation—people who were charged fees to enter forbearance, charged multiple late fees for a single delayed payment, denied access to their payment history, received inaccurate PSLF information, or were steered into interest-accruing forbearances without being informed of better options.

"Even when technology automates the discrimination, the employer is still responsible," CFPB Director Rohit Chopra said. "Workers facing discrimination from an employer's use of technology can count on the EEOC to seek remedies."

Navient, characteristically, admitted no wrongdoing. "This agreement puts these decade-old issues behind us," a company spokesperson said. "While we do not agree with the CFPB's allegations, this resolution is consistent with our go-forward activities."

MOHELA: the new failure

Inheriting a crisis

When Navient exited federal student loan servicing, millions of borrowers were transferred to other servicers—including MOHELA. The Missouri Higher Education Loan Authority had a specific mandate: it was designated as the sole servicer for borrowers pursuing Public Service Loan Forgiveness, giving it responsibility for some of the most complex and high-stakes accounts in the federal student loan system.

MOHELA failed spectacularly.

The American Federation of Teachers' July 2024 lawsuit documents a pattern of misconduct that mirrors Navient's worst abuses. The union's investigation, conducted with the Student Borrower Protection Center, found that approximately 40 percent of MOHELA customers experienced a "servicing failure" during the student loan system's return to repayment after the COVID-19 pandemic pause.

The failures ranged from annoying to devastating. Borrowers reported wait times of 4 to 14 hours to speak with a customer service representative—if they could get through at all. MOHELA engaged in what the lawsuit calls "call deflection," directing customers away from its understaffed call centers toward its website and "self-help" options that couldn't address their complex problems.

But the real harm came from processing failures. Employment certification forms for PSLF were lost or delayed. Payment counts were miscalculated. Borrowers who had been making payments for years discovered their progress toward forgiveness had been incorrectly tracked. Some were sent to collections despite being current on their payments. Others were denied forgiveness despite clearly qualifying.

The PSLF processing disaster

MOHELA was supposed to fix PSLF's problems. Instead, it created new ones.

The servicer had a singular responsibility: process PSLF applications accurately and efficiently. The Department of Education was paying it more than a billion dollars specifically to help borrowers navigate this program. And MOHELA processed the largest amount of forgiveness in the program's history—nearly $55 billion for 737,000 borrowers.

But for every borrower who received forgiveness, others were left in limbo. The lawsuit alleges MOHELA gave borrowers contradictory information about their eligibility. Representatives would tell callers one thing, only for the next representative to say something entirely different. Paperwork submitted months earlier would be marked as "pending" with no explanation and no timeline for resolution.

Borrowers who had done everything right—made 120 payments, worked for qualifying employers, submitted their certifications on time—found themselves denied or delayed because of servicer errors. The program with a 99 percent rejection rate in 2017 had improved, but MOHELA's failures meant that even qualified borrowers couldn't access the forgiveness they had earned.

As of June 2025, more than 1.5 million applications for income-driven repayment plans were backlogged. Another 65,448 PSLF buyback requests—applications from borrowers seeking to purchase credit for months spent in forbearance—were pending with the government. The bottleneck has only worsened.

State investigations

MOHELA's failures have attracted attention beyond the AFT lawsuit. Multiple state attorneys general have opened investigations into the servicer's practices, examining allegations that it misled borrowers about repayment options and failed to provide required information in a timely manner.

The California Department of Financial Protection and Innovation (DFPI) has taken action against MOHELA, asserting that the servicer failed to turn over timely information about borrowers eligible for debt relief, effectively sabotaging more than a thousand Californians who could have applied for forgiveness programs.

MOHELA has defended itself vigorously. "Providing support to student loan borrowers is the utmost priority to MOHELA, and any claims to the contrary are false," the organization said in response to the AFT lawsuit. But the pattern of complaints, investigations, and legal actions suggests otherwise.

The SAVE plan catastrophe

What SAVE promised

The Saving on a Valuable Education (SAVE) plan, announced by the Biden Administration in 2023, was designed to be the most borrower-friendly income-driven repayment plan ever created. It promised to cut undergraduate loan payments in half compared to other IDR plans, prevent balances from growing when borrowers made their required payments, and provide forgiveness after as few as 10 years for borrowers with small balances.

For millions of borrowers struggling with student debt, SAVE represented hope. Here was a plan that would make payments genuinely affordable—sometimes as low as $0 for borrowers with income at or below 225 percent of the poverty line—while still counting toward eventual forgiveness.

The legal assault

That hope was short-lived. Republican-led states challenged the SAVE plan in court, arguing that the Department of Education had exceeded its authority by creating the program without explicit congressional approval. The legal theory was that major policy changes like student loan forgiveness require congressional action, not executive rulemaking.

In June 2024, a federal court blocked key provisions of the SAVE plan. In February 2025, the Eighth Circuit Court of Appeals held that the entire SAVE plan was unlawful. A federal district court entered an injunction in April 2025 implementing the appeals court's decision.

The plan that promised to transform student loan repayment was dead.

Millions in limbo

The consequences for borrowers were immediate and chaotic. More than 8 million borrowers who had enrolled in SAVE found their loans placed into an administrative forbearance—a pause on payments that sounded helpful but came with devastating implications.

During the forbearance, interest initially didn't accrue. But that changed on August 1, 2025, when the Department of Education announced that interest would resume for SAVE borrowers. A typical borrower could see their federal student debt grow by $219 per month in interest charges alone if they stayed in the forbearance and made no payments.

Worse, the months spent in SAVE forbearance don't count toward income-driven repayment forgiveness or Public Service Loan Forgiveness. Borrowers pursuing those programs watched helplessly as time passed without progress toward becoming debt-free. Years of patience and planning were undermined by forces entirely outside their control.

The path forward

The Department of Education has recommended that SAVE borrowers switch to another income-driven repayment plan. The online IDR application became available again on March 26, 2025, and borrowers can still apply for Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR).

Most experts recommend IBR as the best current alternative. Unlike SAVE's promise of payments capped at 5 percent of discretionary income, IBR caps payments at 10 percent for newer borrowers and 15 percent for those with older loans. It's more expensive than SAVE would have been—but it's available, and payments count toward forgiveness.

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act, which includes a new income-based Repayment Assistance Plan scheduled to become available by July 1, 2026. Some existing plans—PAYE and ICR—are being phased out by 2028. The landscape continues to shift, leaving borrowers perpetually uncertain about their options.

The economics of servicer abuse

Why forbearance makes sense for servicers

Understanding why loan servicers steered borrowers toward forbearance requires understanding how servicers get paid. The federal government pays servicers a fixed fee per borrower per month to manage student loan accounts. That fee doesn't vary much based on how much work the servicer does for each borrower.

Processing a forbearance request is fast and cheap. A customer service representative can complete the transaction in minutes. The borrower's payments stop, and the servicer continues collecting its monthly fee.

Processing an income-driven repayment application is slow and expensive. The representative needs to verify the borrower's income, calculate the appropriate payment amount, ensure the borrower has the right loan type, and potentially guide them through consolidation if they don't. The servicer collects the same monthly fee either way.

From a pure profit perspective, the choice is obvious: push borrowers toward forbearance. The servicer makes the same money with less work.

The cost to borrowers

Research from the University of Texas at Dallas quantified the damage. Examining Department of Education data on student loan borrowers, researchers found that more than 85 percent of financially distressed borrowers accrued additional interest through forbearance instead of switching to income-driven repayment plans or deferment that would have stopped interest from growing.

The Student Borrower Protection Center documented that this steering was the primary reason borrowers weren't receiving the debt cancellation promised under IDR programs. Of more than 4 million borrowers whose loans were at least 20 years old—and who should have been eligible for IDR cancellation—fewer than 200 had actually had their debts cancelled through the program. Years of forbearance, steered by servicers like Navient, had prevented borrowers from making the qualifying payments they needed.

The GAO's estimate of $6,742 in extra interest for three years of forbearance on a $30,000 loan is just one example. Many borrowers experienced multiple periods of forbearance over longer timeframes, adding tens of thousands of dollars to their balances. Money that could have gone to principal instead went to interest—interest that borrowers were never informed they could avoid.

The regulatory failure

How did this continue for so long? The answer lies in regulatory complexity and underenforcement.

The Department of Education contracts with private companies to service federal student loans but historically lacked robust oversight mechanisms. The CFPB has authority over servicers under consumer protection law but faced years of industry opposition and, at times, political interference that limited its enforcement capacity.

State attorneys general stepped into the breach, conducting their own investigations and ultimately extracting the $1.85 billion settlement from Navient. But state enforcement is patchwork—aggressive in some states, nonexistent in others—and doesn't provide systemic protection for all borrowers.

The result was a system where misconduct could flourish for years before accountability arrived. By the time Navient was banned from federal student loan servicing in 2024, the company had already harmed millions of borrowers and exited the business largely on its own terms.

Real borrowers, real harm

Teachers betrayed

Maria taught elementary school in Arizona for 15 years. She enrolled in Public Service Loan Forgiveness shortly after the program was created, believing that after 10 years of payments, her remaining $45,000 balance would be forgiven. She contacted her servicer—Navient—to make sure she was doing everything right.

The representative told her she was on track. What they didn't tell her was that her FFEL loans didn't qualify for PSLF. She needed Direct Loans, and she needed to consolidate. Maria made 10 years of payments that didn't count toward forgiveness because no one at Navient explained the basic eligibility requirements.

When she finally discovered the error in 2017—the year she should have received forgiveness—Maria had to start over. She consolidated her loans and began making qualifying payments from scratch. By then, her balance had grown to $62,000 due to capitalized interest from the forbearances Navient had steered her into during tight months.

Maria's story is not unique. The American Federation of Teachers documented hundreds of similar cases among its members—educators who devoted their careers to public service and were betrayed by the companies entrusted to help them.

The nurse who couldn't escape

James worked as an ICU nurse at a nonprofit hospital in Ohio. He had $78,000 in student loans from nursing school and enrolled in income-driven repayment as soon as he graduated, determined to manage his debt responsibly.

For six years, James made his payments on time every month. He submitted his employment certification forms annually, as required. He checked his account regularly to verify his payment count was accurate.

Then his loans were transferred to MOHELA.

Within months, the payment count on his account changed. Payments that had been marked as qualifying suddenly weren't. When James called to ask why, he waited three hours to speak with a representative, who told him there was a "processing error" and that it would be corrected. It wasn't.

James has now spent two years fighting with MOHELA to restore credit for payments he documented making. His estimated forgiveness date has been pushed back repeatedly. Meanwhile, the stress has affected his health and his work performance. He's considering leaving nursing entirely—exactly the opposite of what PSLF was designed to encourage.

The for-profit college trap

DeShawn enrolled at ITT Technical Institute in 2008, believing the school's promises of job placement and career success. He took out private student loans through Sallie Mae—which later became Navient—at an interest rate of 14.5 percent.

The school closed in 2016 amid fraud allegations. DeShawn never got the degree he was promised. But he still owed $34,000 on loans for an education that was worthless.

When the state attorneys general settlement was announced in 2022, DeShawn was one of the 66,000 borrowers whose private loans were cancelled. He received a letter informing him that his balance was zeroed out and any payments he'd made since a certain date would be refunded.

For DeShawn, the settlement was life-changing. But he's aware of how close he came to spending decades paying for a fraudulent education that Navient should never have financed. "They knew that school was garbage," he says. "They knew I'd never be able to pay that money back. They didn't care."

Your rights as a borrower

Federal protections

Federal law establishes baseline protections for student loan borrowers that servicers must follow. Under the Higher Education Act and Consumer Financial Protection Act, servicers are required to apply your payments correctly to your account, maintain accurate records of your payment history, and provide clear monthly statements showing your balance, interest rate, and payment due date.

When you contact your servicer about repayment options, they're required to explain all available plans—not just the option that's easiest for them to process. They cannot steer you toward forbearance without explaining that income-driven repayment might be more beneficial. They must process your applications in a timely manner and notify you if additional information is needed.

For borrowers pursuing PSLF, servicers have specific obligations. They must correctly track your qualifying payments, process your employment certification forms, provide accurate information about program requirements, and notify you if they believe you don't qualify—with an explanation of why.

The CFPB has authority to enforce these protections and take action against servicers that violate consumer financial protection laws. The bureau's enforcement actions against Navient demonstrate that misconduct has consequences, though the process of holding servicers accountable can take years.

State protections

Many states have enacted their own student loan borrower protections that go beyond federal law. California's Student Loan Servicing Act requires servicers to be licensed in the state and subjects them to oversight by the Department of Financial Protection and Innovation. Illinois has enacted strong borrower protections including requirements for accurate record-keeping and timely processing. New York requires servicer licensing and has conducted significant enforcement actions against companies that harm borrowers.

These state laws create additional accountability mechanisms. Even when federal enforcement is slow or limited, state attorneys general and financial regulators can investigate servicer misconduct and take action on behalf of their residents. The $1.85 billion Navient settlement was the product of state enforcement, not federal action.

Check with your state attorney general's office or state financial regulator to understand what protections apply in your jurisdiction. Many states have dedicated student loan ombudsmen or complaint hotlines that can help you navigate problems with your servicer.

The right to complain

You have the right to file complaints through multiple channels, and those complaints matter. The CFPB maintains a consumer complaint database and forwards complaints to servicers, who are required to respond. High volumes of complaints about specific practices can trigger investigations and enforcement actions.

To file a CFPB complaint, visit consumerfinance.gov/complaint. Include your servicer's name, your account information, a description of the specific problem, documentation of the issue, and what resolution you're seeking. The CFPB tracks patterns in complaints and uses them to identify systemic problems.

The Federal Student Aid Ombudsman Group helps resolve disputes between borrowers and servicers. You can reach them at studentaid.gov/feedback-ombudsman. The ombudsman can investigate servicer actions, facilitate communication, and sometimes resolve issues that you haven't been able to fix on your own.

Your state attorney general is another important avenue for complaints, particularly when you believe a servicer has violated state consumer protection laws. The National Association of Attorneys General maintains a directory at naag.org.

Protecting yourself

Documentation is your defense

The single most important thing you can do to protect yourself is maintain comprehensive records of your student loans. Your records may be more accurate than your servicer's—and if a dispute arises, documentation will be your defense.

Keep records of every payment you make, including bank statements or receipts showing the date, amount, and method of payment. Save all communications with your servicer, including emails, letters, and notes from phone calls. If you call your servicer, note the date, time, name of the representative, and a summary of what was discussed. Some states allow you to record phone calls without the other party's consent—check your state's laws.

Download and save your monthly statements, which show your balance and payment history. Take screenshots of your online account, especially any information about payment counts or forgiveness progress. For PSLF borrowers, save copies of every employment certification form you submit.

If your servicer provides information that contradicts what you've documented, follow up in writing. Send an email or letter stating what you were told, when, and by whom. This creates a paper trail that can be invaluable if you need to dispute an error later.

Check your account regularly

Servicer errors are common. The only way to catch them is to review your account regularly and verify that the information matches your records.

Check that your payment history is accurate. Did all your payments post correctly? Were they applied to the right loan? If you're on an income-driven plan, was your payment amount calculated correctly based on your income?

Verify your balance. Is it what you expect given your payment history and interest rate? Has interest capitalized (been added to principal) when it shouldn't have? Are there fees you don't recognize?

For PSLF borrowers, confirm your qualifying payment count. Does it match your records? Have previously qualifying payments been removed? Is your employer correctly certified as qualifying?

If you find errors, don't assume they'll be corrected automatically. Contact your servicer in writing, describe the error specifically, provide documentation, and request correction by a specific date. Follow up if you don't receive a response.

Navigating the current chaos

The student loan system in 2025 is in unprecedented turmoil. The SAVE plan is defunct, IDR applications faced months-long backlogs, PSLF processing is delayed, and policy continues to shift. Here's how to navigate it:

If you're enrolled in SAVE, you need to act. Staying in the SAVE forbearance means interest is accruing (as of August 2025) and you're not making progress toward forgiveness. Apply for another IDR plan—IBR is the most commonly recommended option—through the online application at studentaid.gov.

If you're pursuing PSLF, continue submitting employment certification forms even amid the chaos. Track your qualifying payments independently using your own records. If you have months of forbearance that could have been payment months, investigate the PSLF Buyback program, which allows eligible borrowers to purchase credit for certain forbearance periods.

If you're in default, the Fresh Start program may help you get back on track, though availability has been limited. Rehabilitation and consolidation remain options for defaulted borrowers. Contact Federal Student Aid for guidance specific to your situation.

Legal options

Class actions against servicers

Multiple class action lawsuits against student loan servicers are ongoing, and new cases continue to be filed:

The AFT lawsuit against MOHELA, filed in July 2024, alleges widespread consumer protection violations affecting millions of borrowers. The case is proceeding in Washington, D.C. superior court. Borrowers who experienced MOHELA servicing failures may be part of the class.

A 2025 Illinois class action against Navient alleges the company operated a fake loan forgiveness program. Although Navient has largely exited federal loan servicing, legal liability for past conduct continues.

The Maldonado case against MOHELA is advancing as of April 2025, challenging the servicer's processing of PSLF applications.

Monitor sites like topclassactions.com and classaction.org for updates on these and other student loan class actions. If you experienced servicer misconduct, you may be eligible to participate in existing cases or to file your own claims.

Individual legal action

You may want to consult with an attorney if you've suffered significant financial harm due to servicer misconduct—particularly if you were denied PSLF forgiveness despite qualifying, were steered into forbearance when better options were available, had payments misapplied for extended periods, or experienced what appears to be fraud or intentional misconduct.

The Student Borrower Protection Center (protectborrowers.org) provides resources and sometimes direct legal assistance to borrowers. The National Consumer Law Center (nclc.org) has expertise in student loan issues and can provide referrals. Legal aid organizations and law school clinics sometimes handle student loan cases for borrowers who can't afford private attorneys.

Many student loan attorneys work on contingency or offer free consultations. The potential for significant damages—including statutory damages under consumer protection laws—means qualified cases can attract legal representation even when borrowers don't have money to pay upfront.

Resources for borrowers

Federal resources

The primary federal resources for student loan borrowers include Federal Student Aid at studentaid.gov, which provides account information, applications, and program details. The FSA Ombudsman at studentaid.gov/feedback-ombudsman helps resolve disputes. The CFPB's student loan tools at consumerfinance.gov/consumer-tools/student-loans provide educational resources and complaint filing.

Advocacy organizations

Several nonprofit organizations advocate for student loan borrowers and provide valuable resources. The Student Borrower Protection Center at protectborrowers.org conducts research, advocacy, and sometimes direct borrower assistance. The National Consumer Law Center at nclc.org provides legal resources and expertise. The Student Debt Crisis Center at studentdebtcrisis.org offers advocacy and borrower support. The American Federation of Teachers at aft.org provides resources specifically for educators.

Legal assistance

For legal help with student loan issues, Student Loan Borrowers Assistance at studentloanborrowerassistance.org provides guidance and resources. The Project on Predatory Student Lending at ppsl.org focuses on borrowers harmed by for-profit colleges and predatory lending. Legal Services Corporation at lsc.gov can connect you with free legal aid if you qualify based on income.

Timeline: key events in student loan servicer accountability

2007-2016: the foundation of failure

The roots of the student loan servicing crisis stretch back decades. In 2007, Congress created the Public Service Loan Forgiveness program, promising debt cancellation for borrowers who made 120 qualifying payments while working in public service. The program's complexity—requiring specific loan types, specific repayment plans, and specific employers—created ample opportunity for servicer misconduct.

In 2010, the Department of Education contracted with private servicers including Navient (then part of Sallie Mae) to manage the federal student loan portfolio. These servicers were paid per borrower per month regardless of service quality, creating the perverse incentives that would fuel a decade of abuse.

By 2014, Navient had spun off from Sallie Mae and become the nation's largest student loan servicer, managing $300 billion in loans for 12 million borrowers. Internal practices steering borrowers toward forbearance were well established but not yet publicly exposed.

2017-2018: enforcement begins

The year 2017 marked a turning point. The first borrowers became eligible for PSLF forgiveness—and the rejection rate exceeded 99 percent. Thousands of public servants who believed they had fulfilled the program's requirements discovered their payments didn't count because servicers had given them incorrect information.

In January 2017, the CFPB filed suit against Navient, alleging the company had systematically harmed borrowers through forbearance steering, PSLF misinformation, and processing failures. The lawsuit would take seven years to resolve.

State attorneys general also began investigating. Illinois, Pennsylvania, Washington, California, and Mississippi filed their own lawsuits against Navient, beginning the state enforcement effort that would culminate in the $1.85 billion settlement.

2019-2021: pandemic pause and investigation

The COVID-19 pandemic brought an unexpected pause to student loan payments beginning in March 2020. For nearly three years, federal student loan borrowers paid nothing as interest rates were set to zero. The pause provided temporary relief but delayed accountability for servicer misconduct.

Behind the scenes, state attorneys general continued building their case against Navient. By 2021, 39 states had joined the investigation, examining evidence of predatory lending to for-profit college students and systematic borrower harm.

2022: the first major settlement

In January 2022, Navient agreed to the $1.85 billion settlement with state attorneys general—the largest student loan settlement in history. The deal included $1.7 billion in private loan cancellation for 66,000 borrowers trapped in predatory debt, $95 million in restitution to 350,000 federal loan borrowers, and conduct reforms requiring Navient to properly advise borrowers about repayment options.

Navient admitted no wrongdoing but began winding down its federal student loan servicing business. Millions of borrowers were transferred to other servicers, including MOHELA.

2023-2024: SAVE and MOHELA

The Biden Administration introduced the SAVE plan in 2023, promising the most affordable income-driven repayment option ever. More than 8 million borrowers enrolled, hoping for lower payments and faster forgiveness.

But MOHELA, now responsible for millions of transferred borrowers plus all PSLF accounts, was struggling. Wait times stretched to hours. Employment certifications were lost. Payment counts were miscalculated. In July 2024, the American Federation of Teachers filed its groundbreaking lawsuit alleging consumer protection violations.

Meanwhile, Republican-led states challenged the SAVE plan in court. By June 2024, federal courts had blocked key provisions.

2024-2025: accountability arrives

September 2024 brought the CFPB's final resolution with Navient: a $120 million settlement and permanent ban from federal student loan servicing. Seven years after the lawsuit was filed, the nation's largest student loan servicer was forced out of the business it had abused for so long.

In February 2025, the Eighth Circuit Court of Appeals struck down the entire SAVE plan, leaving 8 million borrowers in limbo. Interest resumed accruing on August 1, 2025, while borrowers scrambled to find alternative repayment options.

The MOHELA lawsuit continues. State investigations continue. And millions of borrowers continue fighting to hold servicers accountable.

Frequently asked questions

General questions

How do I know if I was affected by Navient's misconduct? If your loans were ever serviced by Navient (or Sallie Mae before the 2014 spin-off), you may have been affected. Specific harm includes being steered into forbearance when income-driven repayment would have been better, receiving incorrect PSLF information, having payments misapplied, or being charged improper fees. The CFPB settlement is expected to automatically identify eligible borrowers for compensation based on account records.

What should I do if my loans were transferred from Navient to another servicer? Review your account immediately after any transfer. Verify that your payment count, balance, and loan details transferred correctly. Document any discrepancies and report them to your new servicer in writing. Keep records from your old servicer as proof of your account status before the transfer.

Is MOHELA still servicing PSLF accounts? As of late 2025, MOHELA remains the designated PSLF servicer, despite the ongoing lawsuit and documented failures. If you're pursuing PSLF, you must work with MOHELA, but you should document all interactions and maintain independent records of your qualifying payments.

What happened to the SAVE plan? The SAVE plan was struck down by federal courts in 2025 and is no longer available. Borrowers enrolled in SAVE were placed into administrative forbearance. Interest began accruing again on August 1, 2025, and time in SAVE forbearance doesn't count toward forgiveness. You should apply for another income-driven repayment plan, such as IBR, to resume making qualifying payments.

Settlement and compensation questions

How will I receive money from the Navient settlements? For the 2024 CFPB settlement, eligible borrowers are expected to be identified automatically based on servicer records. You should not need to file a claim. The CFPB will distribute $100 million to affected borrowers, with individual amounts depending on the type and extent of harm. For the 2022 state settlement, most distributions have already occurred—if you were eligible for private loan cancellation or restitution, you should have received notification.

I was steered into forbearance years ago. Can I still get compensation? Potentially, yes. The CFPB settlement covers borrowers who were steered into forbearance without being informed of better options. If your loans were serviced by Navient and you were placed in forbearance when income-driven repayment would have been more beneficial, you may be eligible for compensation. The settlement administrator will review account records to identify affected borrowers.

What if MOHELA denied my PSLF application incorrectly? First, request reconsideration through MOHELA's formal dispute process. Document the error and provide evidence of your qualifying payments and employment. File complaints with the CFPB and FSA Ombudsman. If you're still denied despite clearly qualifying, consult with a student loan attorney—you may have grounds for individual legal action, and the ongoing AFT lawsuit may provide a class action avenue.

Current situation questions

Should I keep making payments while my loans are in SAVE forbearance? The safest approach is to switch to another IDR plan and resume making qualifying payments. Staying in SAVE forbearance means interest is accruing and you're not making progress toward forgiveness. Apply for IBR or another available plan at studentaid.gov. If you can't afford payments, IBR payments can be as low as $0 based on your income.

How long will the IDR application backlog last? The backlog improved after IDR applications came back online in March 2025, but processing times remain extended. Application processing that should take 30 days has sometimes taken months. Submit your application as soon as possible and follow up if you don't receive confirmation within 60 days.

Will there be another SAVE-like plan in the future? The One Big Beautiful Bill Act signed in July 2025 includes a new Repayment Assistance Plan scheduled to be available by July 1, 2026. Details are still being finalized, and the plan's terms are expected to be less generous than SAVE. Some existing plans (PAYE and ICR) are being phased out by 2028. Monitor studentaid.gov for updates on new repayment options.

State-by-state borrower protections

Strong protection states

Several states have enacted comprehensive student loan borrower protection laws that provide rights beyond federal law.

California's Student Loan Servicing Act, enforced by the Department of Financial Protection and Innovation (DFPI), requires servicers to be licensed in the state, maintain accurate records, process applications timely, and provide clear information about repayment options. The DFPI has taken enforcement action against MOHELA and other servicers, and California borrowers can file complaints directly with the department. California also has a Student Loan Ombudsman who can help resolve disputes.

New York requires student loan servicers to obtain licenses from the Department of Financial Services. The state has conducted significant enforcement actions, including investigations into servicer practices that contributed to the Navient settlement. New York borrowers have access to both state and federal complaint mechanisms, and the state attorney general has been aggressive in pursuing servicer misconduct.

Illinois enacted the Student Loan Servicing Rights Act, which requires servicers to evaluate borrowers for income-driven repayment options before placing them in forbearance—directly targeting the steering practices that harmed so many borrowers. Illinois also filed suit against Navient independently and has an active student loan ombudsman program.

Connecticut, Colorado, Virginia, Washington, and several other states have enacted student loan borrower protection laws with varying levels of coverage. These laws typically require servicer licensing, establish complaint processes, and create enforcement mechanisms at the state level.

Limited protection states

Many states have not enacted specific student loan borrower protection laws. Borrowers in these states rely primarily on federal protections under the Consumer Financial Protection Act and general state consumer protection laws that may not specifically address student loan servicing.

If you're in a state without specific protections, federal complaint mechanisms remain available. The CFPB, FSA Ombudsman, and your state attorney general's consumer protection division can all receive complaints about servicer misconduct.

The path forward

The student loan servicing system is broken. Companies entrusted to help borrowers have instead exploited them. Regulators were slow to act. Policies shift unpredictably. And millions of Americans are paying more than they should for educations that were supposed to improve their lives.

But change is possible. The Navient ban proves that accountability can happen—even if it takes too long. The state settlements prove that enforcement works. The class actions prove that borrowers can fight back.

What you can do right now matters. Document everything. Check your accounts. File complaints when servicers fail you. Know your rights. Connect with advocacy organizations. Consider legal options if you've been harmed.

The companies that manage your student loans may not have your best interests at heart. But you have more power than you might think. Informed borrowers who demand accountability are the reason Navient is banned from federal servicing, the reason MOHELA faces a major lawsuit, the reason regulators are paying attention.

Your education was supposed to be an investment in your future. Don't let servicer abuse turn it into a trap. Know your rights, document what happens, and fight back.

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This guide provides general information about student loan servicers and borrower rights. It does not constitute legal or financial advice. Student loan policies change frequently—often dramatically, as the SAVE plan situation demonstrates. Consult with a student loan advisor or attorney for advice specific to your situation.

Sources: CFPB, Federal Student Aid, Student Borrower Protection Center, American Federation of Teachers, NY Attorney General, NPR, CNBC, GAO

Last updated: December 2025