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$1.7 billion in student debt canceled for 66,000 borrowers in Navient settlement

$1.7 billion in student debt canceled for 66,000 borrowers in Navient settlement
Posted at 10:05 AM, Apr 14, 2022
and last updated 2022-04-15 09:30:35-04

In January, 39 state attorney general offices announced that one of the nation’s largest student loan servicers would resolve allegations of widespread unfair, deceptive and abusive practices.

Lawsuits claimed that Navient improperly drove some federal student loan borrowers into forbearance instead of federal student loan relief programs. Allegations stated that the provider knew that borrowers attending predatory for-profit schools would be unlikely to be able to repay the high-interest private student loans.

The attorneys general reported that if the company had provided the help it promised, borrowers could have had payments reduced, received subsidies or attained debt forgiveness.

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“Navient repeatedly and deliberately put profits ahead of its borrowers — it engaged in deceptive and abusive practices, targeted students who it knew would struggle to pay loans back, and placed an unfair burden on people trying to improve their lives through education,” Pennsylvania Attorney General Shapiro said in a statement. “Today’s settlement corrects Navient’s past behavior, provides much-needed relief to Pennsylvania borrowers, and puts in place safeguards to ensure this company never preys on student loan borrowers again.”

Although Navient has denied any wrongdoing and has admitted no liability as part of the agreement, the company will provide relief totaling $1.85 billion to settle litigation.

Navient will cancel the remaining balance on $1.7 billion in subprime private student loans owed by nearly 66,000 borrowers nationwide as part of the settlement. In addition, the company will make a total of $95 million in restitution payments of about $260 each to approximately 350,000 borrowers in certain types of long-term forbearances.

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How To Qualify For Settlement Relief

If you are eligible for the private loan cancellation under the settlement, you do not need to take any action. Navient will notify eligible private loan borrowers in writing by July 2022.

However, since the settlement administrator will send postcards this spring, you are encouraged to ensure your contact information in your studentaid.gov account is current. You can create an account if you do not already have one.

Note that you must reside in one of the restitution-participating states in order to receive relief. Debt relief will primarily go to those borrowers who made loans through Sallie Mae, the name by which Navient was previously known, between 2002-2014, and had at least seven months of delinquent payments before June 30, 2021.

Some borrowers who continue to pay off their loans and remain in good standing with Navient have criticized this settlement, which offers them no relief despite the fact that they may have experienced fraud as well. If you are one of these people, you may wish to pursue you own litigation or seek financial relief through a “borrower defense to loan repayment” option.

For more information, visit the Navient AG Multi-State Settlement website.

This story originally appeared on Don't Waste Your Money. Checkout Don't Waste Your Money for product reviews and other great ideas to save and make money.

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8:47 PM, Oct 17, 2018

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