Navient lawsuit settlement: Over 400,000 student loans will get debt relief
The agreement will settle lawsuits brought by several state attorneys general who claimed that Navient, one of the largest student loan service companies in the United States, engaged in unfair practices and made loans predators to students who were probably unable to repay them.
Approximately 350,000 federal students borrowers that Navient placed on long-term forbearance – which allowed them to temporarily stop making payments – will receive approximately $260 each, totaling $95 million in compensation.
In addition, Navient must fully forgive the remaining private loan balances borrowed by approximately 66,000 students, totaling $1.7 billion. These loans were largely granted between 2002 and 2010.
“Navient knew that people were counting on their loans to improve their lives and the lives of their children and instead of helping them, they ran a multi-billion dollar scam,” Pennsylvania Attorney General Josh Shapiro said Thursday. during a press conference. He co-led litigation with the attorneys general of Washington, Illinois, Massachusetts and California.
State attorneys general have claimed Navient pushed federal borrowers for forbearance rather than ordering them to sign up for low-cost repayment plans. As a result, some of these borrowers got into debt as the interest accrued.
The lawsuit also alleges that Navient provided private loans to students attending for-profit schools and colleges with low graduation rates, even though it knew a high percentage of those borrowers would be unable to repay the loans.
Navient denied breaking any law in the colony.
“The company’s decision to resolve these matters, which were based on unsubstantiated allegations, 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 statement.
Until recently, Navient had a contract with the US Department of Education to service federal student loans, but the company decided to end that contract late last year. Earlier this month, he transferred his federal student loan portfolio to a manager called Aidvantage. Navient continues to offer private student loans.