Student Loan Processor Navient Makes Deal With State Attorneys General To Settle Claims Of Predatory Student Loans
Student loan processor Navient will cancel $1.7 billion worth of debt for 66,000 students. Navient agreed to do this in an agreement to settle a lawsuit with 39 states and the District of Columbia.
The $1.7 billion in canceled debt is entirely for private student loans. The federal government does not guarantee these types of loans. Navient will also make $95 million worth of restitution payments to 350,000 federal student loan borrowers. The company placed those people in certain long-term forbearance programs.
However, Navient did not admit any fault in the settlement and maintains that it did nothing illegal. The company has long managed federal student loans on behalf of the Department of Education. However, Navient sold those duties off to a different servicer in 2022.
The lawsuits began five years ago. Plaintiffs allege that Navient made loans to borrowers it knew were likely to default. The lawsuit also alleges Navient steered borrowers toward expensive forbearance programs instead of cheaper income-based repayment options.
The states are suing over sub-prime loans that Navient issued.
Navient issued these loans to student who were attending for-profit colleges. Many of whom went bankrupt. Most for-profit colleges had a graduation rates below 50%. That made it unlikely students would ever be able to pay the loans back.
However, the federal court must still approve the settlement. Eligible borrowers need to make sure the US Department of Education has up-to-date addresses for them. Borrowers entitled to the settlement funds should be notified if they are receiving relief in the spring or early summer.
The Consumer Financial Protection Bureau is also suing Navient. That case is still going forward. That lawsuit alleges that Navient deceived borrowers. Thus, forcing them to make higher payments than necessary.
Also, Check Out This Article About Student Loan Processor Navient: