“Navient has systematically and illegally failed borrowers at every stage of repayment,” CFPB Director Richard Cordray said on a call with reporters Wednesday. “These unlawful practices have cost student-loan borrowers across the country both heartache and money. And we are working to make sure they do not happen again.”

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Among the most serious charges in the CFPB complaint is an allegation that Navient incentivized employees to encourage borrowers to postpone payments through forbearance, an option in which interest continues to accrue, rather than enroll them in an income-driven repayment plan that would avoid fees. As a result, the CFPB says Navient amassed $4 billion in interest charges to the principal balances of borrowers who were enrolled in multiple, consecutive forbearances from January 2010 to March 2015.

Furthermore, the bureau accuses Navient of misleading people about the terms of renewing enrollment in income-driven repayment plans that cap monthly bills to a percentage of earnings, and misreporting the loan discharge of disabled borrowers to the credit bureaus. The complaint also claims Navient’s subsidiary, debt collection agency Pioneer Credit Recovery, made illegal misrepresentations about the federal loan rehabilitation program available to defaulted borrowers.

In a statement, Navient called the bureau’s lawsuit “unfounded” and politically motivated. The company insists the standards the CFPB are using to reach its conclusions are “inconsistent” with the Education Department’s regulations. It alleges that the consumer bureau issued an ultimatum to settle by Inauguration Day or be sued, a threat the company says it rejected and one the CFPB declined to discuss.

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“The timing of this lawsuit — midnight action filed on the eve of a new administration — reflects their political motivations,” the company stated. “We cannot and will not accept agenda-driven ultimatums designed to get headlines rather than help for student borrowers. We will vigorously defend against these false allegations and continue to help our customers achieve financial success.”

The CFPB’s accusations are also central to separate lawsuits filed Wednesday by Illinois Attorney General Lisa Madigan and Washington Attorney General Bob Ferguson against Navient. The state attorneys general teamed with the consumer bureau in a multiyear investigation into the business practices of Navient and its subsidiaries, finding widespread breakdowns in servicing, they said.

In addition to the servicing claims, Illinois and Washington allege that Navient and its former parent company Sallie Mae peddled “risky and expensive” subprime private student loans that carried high interest rates and fees. The loans were mostly provided to students enrolled in for-profit colleges, according to Madigan.

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“Navient and Sallie Mae saddle students with subprime loans that Sallie Mae designed to fail,” Madigan said on Wednesday’s call. “Sallie Mae increased its unfair and deceptive subprime lending, while disregarding evidence that these loans would likely default at extraordinarily high rates.”

Sallie Mae said Navient is responsible for “all costs, expenses, losses and remediation” arising from the state lawsuits, as per the terms of the companies’ split more than three years ago. Navient absorbed Sallie Mae’s liabilities and 95 percent of its assets, including servicing rights to $300 billion in student loans.

Since its separation from Sallie Mae, Navient has grown into one of the largest servicers of student loans. The company collects the private and federal student loan payments of more than 12 million people, with more than half of its accounts coming from a contract with the Education Department, according to the CFPB.

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Navient has had its share of run-ins with regulators. The Justice Department fined the company millions of dollars for unlawfully charging active-duty service members high interest rates and late fees on student loans, violations that the company called “processing errors.” That case led to a dispute between congressional Democrats and the Education Department, which said it found few instances of Navient charging military personnel more than 6 percent interest permitted by law. Sen. Elizabeth Warren (D-Mass.) demanded a review of the probe, which the agency’s inspector general called deeply flawed.

On Wednesday, Warren, a longtime critic of Navient, said the CFPB’s lawsuit “could help put money back in the pockets of thousands of borrowers, including disabled veterans who have been harmed by this company’s repeated lawbreaking.”

The CFPB and the state attorneys general are all seeking financial redress for borrowers they say were harmed by Navient’s actions.

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“The lawsuits are full of deeply disturbing allegations,” said Rohit Chopra, senior fellow at the Consumer Federation of America and the former student-loan point man at the CFPB. “If this is true, then the company’s actions may be responsible for some of the pileup of defaults that we’ve seen in recent years.”

Compass Point analyst Michael Tarken said, in a financial note, that the “financial exposure” and “protracted court battle may weigh on [Navient’s] ability to win new Department of Education contracts, including the forthcoming single servicer contract.”

Education Undersecretary Ted Mitchell, who did not discuss Navient’s chances in the contract bid, said, in a statement, the agency’s “contracting officials will continue to administer ED’s contracts and conduct ED’s procurement competitions fairly and in accordance with applicable regulations, solicitation provisions, and the terms of its contracts, to ensure the interests of the government and of student borrowers are protected.”