Navient will cancel the student loans balances of over 66,000 borrowers as part of a large settlement.
Navient, once one of the largest student loan servicers in America, reached a settlement Thursday with Pennsylvania and other states to cancel over $1.8 billion of student loans and to pay close to $100 million to borrowers.
After Josh Shapiro, Pennsylvania Attorney General led a lawsuit against Navient for issuing predatory student loans and coaxing borrowers to accept long-term forbearances which run counter to the company’s promise of finding the best repayment options.
Even though income-driven repayment plans or other options could have led to a lower balance, these forbearances were paid as low as $0 and piled on interest.
The settlement will impact hundreds of thousands of people in 38 states and Washington, D.C. Navient is canceling student loan balances of more than 66,000 borrowers, which total $1.7 billion.
In addition, over 350,000 students in 32 states who borrowed federal student loans through Navient, will each receive $260 in restitution payments. These payments will be made this spring. Shapiro’s office stated that Pennsylvania will provide more than 15,000 students with restitution and student debt cancellations totaling more than $70million.
A list of all states that participated is available on the settlement site.
Ashley Hardin, a woman, told the New York Times that she borrowed more than $100,000 to pay for her education at the Brooks School of Photography. She also pays over $1,000 per month in student loans. As part of the settlement, she hopes to have her debt forgiven.
She told the Times, “This was a long process and justice was served.”
Private borrowers affected by the cancellations don’t need to do anything. According to Shapiro’s office, you will receive notices of your loan cancellations by July and a refund for any payments made after June 2021.
According to the settlement press release, if you are one of the federal borrowers you will receive a postcard by mail this spring. You only need to make sure that your address is up-to-date on the Department of Education’s financial assistance website.
More information is available at the settlement site.
Shapiro stated in a statement that Navient repeatedly and deliberately placed profits before its borrowers. It engaged in deceptive, abusive practices, targeted students it knew would struggle to repay loans, and placed an unfair burden upon people trying to improve their lives by education.”
Today’s Settlement corrects Navients past behavior and offers relief for Pennsylvania borrowers. It also includes safeguards to ensure that the company doesn’t prey on student loan borrowers again.”
Navient denies any wrongdoing despite the settlement.
Mark Heleen: “The company’s decision to not settle these matters that were based on unfounded claims allows for us to avoid the additional burden of prevailing in court.” In a statement, Navient’s chief legal officer stated.
Navient was once the federal student loan processor for over 5.6 million students. In October, however, the company transferred all its federal loans to Maximus. Maximus is a government service contractor that generates billions of dollars each year. These loans are now managed under the name Aidvantage.
- Student Loan Forgiveness For Teacher-How To Get It In 2021?
- How to Make The Minimum Amount On Your Student Loan Payments?
- 2021 How Many Borrowers Will Qualify For Student Loan Forgiveness?
- Impact Of COVID-19 On Student Loan Debt
Navient agrees to a $1.86B settlement
39 states filed claims against a large student loan servicer for engaging in deceptive and abusive practices.
Navient, the largest student loans servicing company in the US, reached a $1.86 Billion settlement with a coalition made up of 39 state attorney generals. Navient also agreed to pay $95million to borrowers who were not eligible for long-term forbearances.
Although Navient isn’t a lender, it manages the student loan repayment process for the US government. Navient decided to stop participating in federal student loan servicing after 2021. Navient was accused in that tenure of engaging with abusive and deceptive tactics, including targeting students it knew would struggle to repay loans.
This settlement is coming as federal student loan payments continue to be halted due to the pandemic. Last month, another extension to the moratorium was granted. Federal student loans will be on pause from May 1st. The US Department of Education recently announced that it would expand its Public Service Loan Forgiveness program, which will provide additional relief for more than 500,000 student borrowers.
“Navient deliberately and consistently put profits before borrowers – they engaged in deceptive abusive practices and targeted students it knew would struggle for loans. They also placed unfair sanctions on students. “People trying to improve themselves through learning are being burdened,” Josh Shapiro (the attorney général of Pennsylvania), stated in a statement.
Shapiro stated that the settlement corrects Navient’s past behavior, and places in place “safeguards” to ensure that this company does not prey on student loan borrowers.
Navient did not admit fault in the settlement. The company stated in a statement that it “denies violating any laws or causing borrower damage” and “denies violating any consumer-protection law.” The student loan company said that it is resolving the claims in order to reduce legal costs.
Navient also agreed to support the success of borrowers as part of the settlement.