Sept 12 (Reuters) - A U.S. regulator on Thursday said it

is banning Navient ( NAVI ) from servicing federal student

loans, removing the company from a market it once led, and

ordered the company to pay $120 million for years of student

lending failures.

The U.S. Consumer Financial Protection Bureau said the ban

would prevent Navient ( NAVI ) from servicing federal direct loans, and

from directly servicing or acquiring most loans under the

Federal Family Education Loan Program.

Navient ( NAVI ) was accused of steering borrowers into delaying loan

repayments even if they qualified for repayment plans based on

their incomes, causing them to pay more in interest, because it

was cheaper and simpler for the Herndon, Virginia-based company.

The CFPB also faulted Navient ( NAVI ) for making mistakes in

processing payments, and misleading borrowers about their

rights.

Thursday's settlement would resolve a lawsuit filed by the

CFPB in Scranton, Pennsylvania in January 2017, and requires a

judge's approval.

The payment includes $100 million of restitution for

consumers, and a $20 million civil fine.

Formerly known as Sallie Mae, Navient ( NAVI ) had been the largest

U.S. student loan servicer when the lawsuit began, handling more

than $300 billion of federal and private student loans for over

12 million borrowers, the CFPB said.