A government watchdog is accusing the nation’s largest student loan servicer of mistreating borrowers.

In a lawsuit filed Wednesday, the Consumer Financial Protection Bureau (CFPB) claimed that Navient NAVI, -1.28% , which services hundreds of billions of dollars of federal and private student loan debt, steered struggling borrowers toward repayment plans that required them to pay more than necessary, failed to listen to borrowers’ instructions about how their payments should be allocated and incorrectly dinged the credit of disabled borrowers who had their loans forgiven, among other allegations. The attorneys general of Illinois and Washington also filed their own suits against Navient Wednesday.

The actions against Navient come after years of complaints from borrower advocates, lawmakers and the CFPB over the way student loan servicers in general — and specifically Navient -- treat borrowers. Servicers are typically borrowers’ main point of contact. Advocates have said these companies often don’t give borrowers enough or the right information, making it more difficult than necessary for them to pay off their debts.

“At every stage of repayment on student loans, Navient has failed to follow the law and caused borrowers needless anxiety and aggravation,” CFPB director Richard Cordray said on a conference call with reporters. “Borrowers and the CFPB have reason to expect better from the nation’s largest student loan servicer.”

Navient officials disputed the bureau’s allegations in a statement, calling the suit “politically driven,” and vowing to fight the claims in court. Company officials also claimed in the statement that Navient regularly educates borrowers about their options, citing company statistics indicating that Navient helps borrowers avoid default.

“The allegations of the Consumer Financial Protection Bureau are unfounded, and the timing of this lawsuit — midnight action filed on the eve of a new administration — reflects their political motivations,” the statement reads.

The suits filed Thursday aren’t the first time regulators have accused Navient of wrongdoing. In 2015, the company agreed to pay $60 million to settle claims brought by the Justice Department, which alleged Navient overcharged servicemembers in interest on their student loans. Despite these allegations and others, Navient continues to service millions of accounts through a lucrative contract with the Department of Education.

CFPB officials on the call with reporters didn’t indicate whether their suit would affect that relationship. But the Department is currently in the midst of awarding a new servicing contract that places more weight on the way servicers treat borrowers. Navient is in the running for the contract.

“If these allegations prove to be true, that will make the company’s ability to score big government contracts an uphill battle,” said Rohit Chopra, the former student loan ombudsman at the CFPB and a senior fellow at the Consumer Federation of America, an association of nonprofit consumer organizations.

In the suits filed by the CFPB and the state attorneys general, the regulators claim Navient failed to work in the best interests of federal borrowers, whose student loans the company serviced. Borrowers with government student loans have a right to pay their debts back according to their income and in many cases they can make payments as low as $0 a month and stay current on their debts. The suits claim that Navient steered struggling borrowers away from these programs in favor of forbearance, which allows borrowers to pause payments on their loans, while the interest builds.

The CFPB complaint alleges that Navient compensates customer service representatives in part based on average call length time, discouraging them from engaging in the sometimes time-consuming process of helping a borrower enroll in an income-driven repayment program. “Employee incentives appear to play a major role, where employees may have felt they should rush borrowers into forbearance plans instead of more sustainable solutions,” Chopra said.

The CFPB suit claims that between January 2010 and March 2015, the number of Navient borrowers enrolled in forbearance generally exceeded the number of borrowers enrolled in income-driven plans. Placing borrowers in forbearance unnecessarily can be costly for the borrowers -- interest capitalizes on student loans in forbearance and some federal student loan borrowers have access to interest subsidies under income-driven plans that aren’t available to them in forbearance. The result: nearly $4 billion worth of interest built on the principal balance of loans of borrowers who were in forbearance but could have benefited from income-driven repayment programs, according to the CFPB’s allegations.

The suits also accuse Navient and its subsidiaries of mistreating federal borrowers during other parts of the repayment process -- including debt collection -- and of harming borrowers with private student loans. For example, the CFPB suit claims Navient misled parents who cosigned on their childrens’ student loans about when they would have the opportunity to apply to be released from the debt.

Officials from the CFPB and from the state attorneys generals offices said they didn’t have an exact estimate of how many borrowers were affected by Navient’s alleged conduct. But the company services the loans of roughly 12 million borrowers and officials say they believe that the alleged wrongdoing was widespread.

“Every single one of the borrowers who is having their loans serviced by Navient or one of Navient’s companies or is a borrower who is impacted by their debt collectors has the potential to be impacted,” Lisa Madigan, the attorney general of Illinois, said on a conference call with reporters.

Madigan and her counterpart in Washington, Bob Ferguson, also brought claims against Navient’s corporate predecessor, Sallie Mae, Wednesday, claiming the company pushed borrowers into loans with high interest rates and fees that the company knew would fail. In 2014, Sallie Mae, which at the time both originated and serviced student loans, spun off its student loan servicing and collection business into a new company, which is now Navient. Since the split, Sallie Mae has focused largely on originating private student loans, while Navient handles servicing and collections.

The allegations against Sallie Mae cover a period -- between 2009 and 2010 -- before Navient was created. Madigan’s suit alleges that during that time Sallie Mae pushed private loans on to students with sometimes double digit interest, rates to borrowers, who in many cases attended schools with poor reputations and likely had little hope of paying the loans back.

In a statement, Sallie Mae distanced itself from the allegations and from those brought by the CFPB against Navient. The company said Madigan’s suit arose out of a multistate investigation into its lending, servicing and collection practices for which Navient became responsible after the split. “Navient has accepted responsibility for all costs, expenses losses and remediation arising from this matter,” the statement reads.

Both of the state law enforcement offices and officials at the CFPB said the goal of the suits is ultimately to prevent the companies from engaging in this alleged conduct in the future and to provide relief for affected borrowers. “If you’re looking to put a price tag on that, it’s billions of dollars,” Madigan said.

But the future of some of the litigation remains uncertain given the new administration. Republicans have indicated they would like to eliminate or curtail the CFPB. http://www.wsj.com/articles/gop-business-groups-launch-campaign-to-constrain-cfpb-1479292203 The additional suits from state law enforcement agencies could make it more difficult for the CFPB’s claims against Navient to disappear, Chopra said. “Regardless of the politics, when federal and state agencies act together, it’s less likely that a company can lobby its way out of accountability,” he said.

Persis Yu, the director of the student loan borrower assistance project at the National Consumer Law Center, said the CFPB’s actions against Navient provide a tangible example of the important role the consumer watchdog plays in ensuring student loan borrowers are treated fairly.

“I certainly hope that the new administration will let the CFPB continue to be as aggressive about protecting student loan borrowers,” she said