Navient will pay $1.85 billion in debt cancellation and restitution for predatory student loan claims. It’s due to a nationwide settlement filed by a coalition of 39 attorneys general.
According to Kansas Attorney General Derek Schmidt, it means nearly $10.3 million in relief for hundreds of Kansas residents. In Missouri, the Attorney General says it results in a $53 million settlement for Missourians.
“As a result of today’s settlement, borrowers receiving private loan debt cancellation will receive a notice from Navient, along with refunds of any payments made on the cancelled private loans after June 30, 2021. Federal loan borrowers who are eligible for a restitution payment of approximately $260 will receive a postcard in the mail from the settlement administrator later this spring.” – Missouri Attorney General Eric Schmitt.
Federal loan borrowers who qualify for relief under this settlement do not need to take any action except update or create their studentaid.gov account to ensure that the U.S. Department of Education has their current address.
Navient Settlement Case
“Navient repeatedly and deliberately put profits ahead of its borrowers – it engaged in deceptive and abusive practices, targeted students who it knew would struggle to pay loans back, and placed an unfair burden on people trying to improve their lives through education,” Pennsylvania Attorney General Josh Shapiro said in the release.
The settlement involves 39 state attorneys general and resolves claims that Navient led student borrowers into long-term forbearances instead of giving them advice on less costly repayment plans, Shapiro said.
Navient said it did not act illegally, and it did not admit any fault in the settlement, according to the Associated Press. The AP cited the New York Times as a source. “The company’s decision to resolve these matters, which were based on unfounded claims, allows us to avoid the additional burden, expense, time and distraction to prevail in court,” Mark Heleen, Navient’s chief legal officer said, according to the Times.
According to the attorneys general, the interest that accrued because of Navient’s forbearance steering practices was added to the borrowers’ loan balances, pushing borrowers further in debt.
Had the company instead provided borrowers with the help it promised, income-driven repayment plans could have potentially reduced payments to as low as $0 per month, provided interest subsidies, and/or helped attain forgiveness of any remaining balance after 20-25 years of qualifying payments (or 10 years for borrowers qualified under the Public Service Loan Forgiveness Program).
Under the terms of the settlement, Navient will cancel the remaining balance on more than $1.6 billion in subprime private student loan balances owed by approximately 62,000 borrowers nationwide.
For more information and a list of frequently asked questions, you can visit www.NavientAGSettlement.com.
States joining Missouri in the lawsuit include Arizona, Arkansas, California, Colorado, Connecticut, the District of Columbia, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia, Vermont, Washington, West Virginia, and Wisconsin.
Kansas AG on Navient Settlement
“This settlement will provide financial relief to Kansas student loan borrowers who, through no fault of their own, were forced into loan plans that only exacerbated their financial struggles,” Schmidt said.
Schmidt filed a consent judgment for the settlement with Navient in Shawnee County District Court today. The document can be found at https://bit.ly/3FrEkEy.
Consumers can report student loan debt relief schemes to the attorney general’s office at www.InYourCornerKansas.org or by calling (800) 432-2310.
Missouri AG on Navient Settlement
“In this case, my Office obtained over $53 million in debt relief and restitution to resolve allegations of widespread unfair and deceptive student loan servicing,” said Attorney General Eric Schmitt. “Taking advantage of students who need assistance in funding their educations is illegal, and can hurt the futures of so many. This settlement is a great result for Missouri students, and for the entire state.”
The petition can be found here, and the executed settlement agreement can be found here.
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