Summary
- CFPB redress payments to Navient borrowers in limbo
- Compensation payouts to be made amount to hundreds of millions of dollars
- Idled agency staff unable to review, approve payments, sources say
The Trump administration’s decision to put the U.S. Consumer Financial Protection Bureau on ice has left a $100 million pot of money intended for borrowers allegedly harmed by the student loan servicer Navient sitting in limbo, according to an advocacy organization.
The agency’s work stoppage also calls into question the fate of potentially hundreds of millions of dollars of separate payouts from financial services companies like Cash App parent Block TD Bank and the lending arm of Honda, which have been ordered to compensate allegedly harmed consumers, two people familiar with CFPB’s operations say.
Without authorization from the agency, the payouts cannot go forward, the sources said.
After a seven-year legal battle, Navient agreed in September to pay $100 million to the CFPB so that the agency could mail checks to student loan borrowers whose costs it said Navient had for years illegally increased in a variety of ways. Navient said it disagreed with the CFPB’s findings.
The Trump administration’s decision to stop work at the agency appears to have halted this compensation, however, according to the Student Borrower Protection Center, which litigates on behalf of student borrowers and advocates for policy in Washington.
“If the Navient checks had rolled out as expected in 2025, we would be hearing from people,” said Mike Pierce, head of the Center. “I do feel confident in saying that the Navient restitution is not being distributed right now.”
Pierce, who previously worked on the Navient case as a former CFPB official, said the agency was under court order to distribute the funds. Reuters could not determine whether there was a specific deadline for when payments should be approved or paid out to parties due compensation.
Navient’s name does not appear among a list of cases on the CFPB’s website for which regular compensation payments are underway. The website’s home page remains dysfunctional and the site does not appear to have been updated since coming under the new administration’s control.
COMPENSATION PAYMENTS
Trump has said the CFPB should be eliminated, accusing it of politicized enforcement, and last month the agency’s acting director Russ Vought ordered a halt to all work with only limited exceptions. Government lawyers and agency officials have said in court papers the CFPB will continue to exist in some “streamlined” form.
The CFPB’s operating funds are drawn from the Federal Reserve but the payments it delivers to consumers deemed to be harmed by corporate misconduct derive from sums collected from the companies it oversees.
Since it began operations in 2013, the agency says it has returned $21 billion to the public through such compensation, as well as canceled consumer debts, reductions on loan principal, and other means.
It disburses payments in a number of ways.
In a sworn statement last month, CFPB Chief Operating Officer Adam Martinez said the agency continued to distribute “approved payments” from its civil penalty fund, which contains the proceeds of corporate fines used to compensate victims.
The Navient funds would fall into a separate category, however, known as “bureau-administered redress,” in which the agency, rather than the company itself, disburses compensation paid by the company.
In order to determine how the $100 million payout should be distributed, the CFPB requires analysis from an outside firm, Bates White, which the agency hired to provide expert testimony for the Navient lawsuit, according to one of the sources.
Data published by Elon Musk’s Department of Government Efficiency last month showed the CFPB had canceled the Bates White contract. Bates White did not respond to a request for comment.
As of Friday, agency leadership had also not given the green light to officials to resume reviewing and approving plans for companies themselves to distribute consumer redress payments directly, according to the sources, indicating that the payment plans would not be able to move ahead.
Since September, when the CFPB reached the Navient settlement, the agency has ordered eight other companies to make consumer redress payments totaling between $202.6 million and $247.6 million.
Deadlines have not yet lapsed for three of those companies – Block, American Honda Finance Corporation and the money transfer business Wise, which were together ordered to pay $85.8 million – to submit redress payment plans, also raising doubts as to whether the CFPB will be able to approve them.
“I’ve never heard of a situation in which after a settlement is reached the victor stops moving forward,” said David Silberman, a visiting lecturer in consumer finance law and former senior CFPB official.
“It’s not money that belongs to the bureau.”