NEW YORK (AP) — The U.S. Consumer Finance Protection Bureau has filed a proposed order to permanently ban Navient from directly servicing federal student loans, which the agency says will put an end “years of abuse.”

Under terms of the Thursday order, which Navient agreed to without admitting any wrongdoing, the Virginia-based financial services company would also have to pay a $20 million penalty and provide another $100 million in relief to impacted borrowers.

“Today, we are closing the book on Navient,” CFPB Director Rohit Chopra said in prepared remarks Thursday, stating that the company harmed millions of borrowers as “one of the worst offenders in the student loan servicing industry.”

Chopra said the CFPB began investigating Navient, which split off from consumer banking corporation Sallie Mae in 2014, nearly a decade ago. The agency later sued Navient, accusing the company of predatory lending practices such as steering those struggling with their debts into higher-cost repayment plans, or long-term forbearance, and failing to properly process payments.

In the years that followed, states also began to examine such allegations of forbearance steering — leading to debt cancelations for many borrowers across the country. In 2022, for example, Navient agreed to settle claims with 39 state attorneys general for $1.85 billion.

In a statement following the filing of the CFPB’s Thursday order, which should be finalized when entered by the court, Navient said the settlement agreement reached with the agency “puts these decade-old issues behind us.”

“While we do not agree with the CFPB’s allegations, this resolution is consistent with our go-forward activities and is an important positive milestone in our transformation of the company,” the company added.

Navient was once one of the largest student loan servicers in the U.S. But that’s changed. The company maintains that it is no longer a servicer or purchaser of federal student loans.

Navient’s contract with the U.S. Education Department to service direct loans ended in 2021. The company says this was transferred to a third party, Maximus, which currently services these loans under the name “Aidvantage.” And earlier this year, Navient reached an agreement to outsource servicing of legacy loans from the Federal Family Education Loan Program to another servicer, MOHELA, starting July 1.

Beyond the ban of servicing direct federal loans, the CPFB’s order would also bar Navient from acquiring most of those FFEL loans, which are federally-backed private loans distributed through a program that ended in 2010. Borrowers may still have these kinds of loans if they attended school before then.

At the time the CFPB filed its lawsuit against Navient back in 2017, the agency said that Navient was servicing student loans of more than 12 million borrowers, including more than 6 million accounts under its contract with the Education Department. In total, the CFPB added, Navient serviced over $300 billion in federal and private student loans.

“Borrowers don’t get to select who services their student loan, so more than a quarter of all student loan borrowers had no choice but to rely on Navient as their servicer,” Chopra said in his Thursday remarks — later adding that the proposed settlement “marks a significant step” for future protections. “Navient is now almost completely out of the federal student loan servicing market and we’ve ensured they cannot re-enter it in the future.”

U.S. Under Secretary of Education James Kvaal also applauded the CFPB’s action Thursday, while pointing to wider efforts from the Biden-Harris administration to “hold loan servicers accountable.” Such efforts includes more than $50 billion in debt relief for over 1 million borrowers related to servicers’ forbearance misuse and income-driven repayment plan adjustments, the Department said earlier this year.

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