Student loan manager Navient will cancel $1.7 billion in student loans
On Thursday, Pennsylvania Attorney General Josh Shapiro announced that Navient, the nation’s largest student loan servicer, would pay $1.85 billion to resolve allegations of “widespread unfair, deceptive and abuses in the granting of predatory student loans”.
The settlement, coordinated by a coalition of 39 attorneys general, resolves claims dating back to 2009 and will result in $1.7 billion in debt forgiveness and $95 million in restitution.
Student loan cancellation will affect approximately 66,000 private borrowers. Eligible private student loan borrowers should receive notice from Navient by July 2022, along with reimbursement of any payments made on private loans canceled after June 30, 2021.
Restitution funds will be distributed to approximately 350,000 eligible federal student loan borrowers, who will be notified of their eligibility for a $260 restitution payment via a postcard sent this spring.
“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,” Shapiro said. in one declaration. “Today’s settlement corrects Navient’s past behavior, provides much-needed relief to borrowers in Pennsylvania, and puts safeguards in place to ensure this company never preys on student borrowers again.”
In the agreement, Navient denies any wrongdoing and, in a Press release, Navient executives continued to push back against the claims.
“The company’s decision to resolve these issues, which were based on unsubstantiated claims, allows us to avoid the additional burden, expense, time and distraction that prevails in court,” said Mark Heleen, Director Legal Navient. “Navient is and has always been to help student borrowers understand and select payment options that are right for them. In fact, we’ve increased enrollment in income-contingent repayment plans and reduces delinquency rates, and each year hundreds of thousands of borrowers we support successfully repay their student loans.”
“The settlements resolve all six lawsuits against Navient,” a representative for Navient told CNBC Make It via email. “Navient recorded an after-tax charge of approximately $170 million as a result of the agreement. The value of defaulted loans canceled is approximately $50 million.”
Advocates for student loan borrowers applaud “historic” settlement.
“Today’s action is a clear victory for many of the millions of borrowers whose Navient and Sallie Mae pain has been shamelessly turned into profit,” States Mike Pierce, executive director of the Student Borrower Protection Center. “Navient has deceived borrowers at every stage of repayment, taking advantage of low-income borrowers, disabled veterans, seniors, and more, all in the service of its bottom line. Today, these 39 states have won an uphill battle to address this long history of abuse.”
Sallie Mae is Navient previous company.
Pierce continues, addressing a critique to Navient’s general manager.
“Borrowers may not be able to take advantage of Navient CEO Jack Remondi $8 million salary“, he said. “But they can rest a little more peacefully knowing that justice has been served.”