What the Navient Settlement Means for Student Loan Borrowers – Forbes Advisor
Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.
More than 400,000 student borrowers will soon have their debt forgiven or receive monetary restitution after student loan servicing giant Navient agreed to a $1.9 billion settlement with 39 state attorneys general last week.
The settlement, announced on January 13, comes after allegations that Navient used predatory and deceptive lending practices dating back to 2009. The company has been accused of further entrenching troubled borrowers by steering them into forbearance programs long term that actually added more interest. the overall balance of the loan; and for allegations that he lent predatory subprime loans to students attending for-profit, low-graduation colleges where he knew those borrowers were unlikely to be able to repay the loans.
“Navient repeatedly and deliberately put profits ahead of its borrowers – it engaged in deceptive and abusive practices, targeted students it knew would have difficulty repaying their loans, and imposed a burden unfair to people trying to improve their lives through education,” Pennsylvania said. Attorney General Josh Shapiro in a press release.
Under the terms of the settlement, Navient will forgive $1.7 billion in private student loans for approximately 66,000 borrowers. An estimated 350,000 federal borrowers will receive restitution payments of about $260 each. Navient is also required to reform its lending practices, including offering more guidance on alternative repayment methods, such as income-contingent repayment (IDR) plans and discount options.
Navient agreed to the settlement while denying any wrongdoing.
“The company’s decision to resolve these matters, which were based on unsubstantiated claims, allows us to avoid the additional burden, expense, time and distraction that prevails in court,” said the General Counsel. of Navient, Mark Heleen, in a press release.
He must also pay $142.5 million to the attorneys general as part of the settlement.
Are you eligible for compensation?
There are several different groups who are eligible for different amounts and types of relief as a result of the settlement. As for the $1.7 billion in canceled private loans, only a small portion of the loans will qualify.
Defaulted private loans that were made in 2002 or later and used to attend specific for-profit schools are eligible. Those who attended a public university but had a credit score below 640 when they received their loan may also have their defaulted debt forgiven.
Eligible borrowers must be in one of the 39 states that participated in the lawsuit. The following states and the District of Columbia are included in the settlement: Arizona, Arkansas, California, Colorado, Connecticut, the District of Columbia, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine , Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, Virginia- Western, Vermont, Washington, Wisconsin.
Unfortunately, if you haven’t defaulted on your debt, you’re not eligible for forgiveness, even if you received a predatory loan.
Federal student loan borrowers may see a smaller reward as part of the settlement. Navient must pay restitution of approximately $260 to each of the 350,000 borrowers who have been placed in specific forbearance programs.
What to do if you qualify
Although the terms of the settlement are complex, eligible borrowers will not have to do anything to receive compensation except to ensure they create an account or have their contact information up to date on StudentAid.gov.
Borrowers with eligible private student loans will receive notice of cancellation from Navient by July 2022. They may also receive a refund of any recent payments they have made on the canceled debt.
Federal student loan borrowers who qualify for the $260 restitution payment should receive a notice in the mail this spring with more information. To view full settlement details, borrowers can visit NavientAGSettlement.com.
Best Student Loan Refinance Lenders of 2022
Find the best student loan refinance lenders for your needs.