Navient Agrees To Major Settlement Over Student Loans

navient-agrees-to-major-settlement-over-student-loans

Navient (Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images)

LightRocket via Getty Images

Navient, of the nation’s largest student loan servicers, agreed to a big settlement regarding your student loans.

Here’s what you need to know.

Student Loans

Navient will provide relief totaling $1.85 billion to resolve allegations of “widespread unfair, deceptive, and abusive student loan servicing practices and abuses in originating predatory student loans,” according to Pennsylvania Attorney General Josh Shapiro.

“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,” Shapiro said. “Today’s settlement corrects Navient’s past behavior, provides much needed relief to Pennsylvania borrowers, and puts in place safeguards to ensure this company never preys on student loan borrowers again.”


Student loan cancellation

Under the terms of the settlement, according to Shapiro, among other conditions, Navient will:

  • Cancel $1.7 billion in subprime private student loan debt owed by nearly 66,000 student loan borrowers, primarily at for-profit schools such as ITT Technical Institute and the Art Institute; (Is student debt cancellation next?)
  • Make $95 million in restitution payments of about $260 each to approximately 350,000 federal loan borrowers who were placed in certain types of long-term forbearance; and
  • Need to notify student loan borrowers who pursue student loan forgiveness that there is a limited waiver available through October 31, 2022 that could help more borrowers count prior payments and get student loan forgiveness.

(Related: Here’s who won’t get student loan forgiveness).

How to get student loan relief

Student loan borrowers don’t need to take any action to get this student loan relief. (Related: Student loan borrowers will get $15 billion of student loan cancellation). Student loan borrowers who will get student loan cancellation will get a notice from Navient by July 2022. Federal loan borrowers who will receive approximately $260 will receive a postcard in the mail from the settlement administrator later this spring. Federal student loan borrowers are encouraged to update their contact information with the U.S. Department of Education through studentaid.gov.

Navient announced it would exit federal student loan servicing for federal student loans, and the U.S. Department of Education will instead work with Maximus to service these federal student loans. Navient described settlement as cancellation of student loans for 66,000 student loan borrowers for private student loans originated largely between 2002 and 2010, plus a one-time payment of approximately $145 million to the states


Student loans: Navient

This settlement is joined by 39 state attorneys general and resolves claims that Navient steered struggling student loan borrowers into costly long-term forbearances instead more affordable income-driven repayment plans. According to the attorneys general, the interest that accrued because of Navient’s practices to put student loan borrowers into forbearance increased their student loan debt and cost them more money. Alternatively, the attorneys general claim Navient could have helped student loan borrowers get a lower monthly payment as low as $0 through an income-driven repayment plan or pursue public service loan forgiveness.

“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,” Navient’s Chief Legal Officer Mark Heleen said. “Navient is and has been continually focused on helping student loan borrowers understand and select the right payment options to fit their needs. In fact, we’ve driven up income-driven repayment plan enrollment and driven down default rates, and every year, hundreds of thousands of borrowers we support successfully pay off their student loans.”

As part of the agreement, Navient expressly denies violating any law, including consumer-protection laws, or causing borrower harm. Navient also has agreed to maintain servicing practices that support borrower success.


Student loans: next steps

As a reminder, student loan servicers can be a helpful resource, but you really should do your own research to make sure you understand all your options for student loan repayment. Student loan relief won’t last forever and student loan cancellation isn’t guaranteed. Here are some popular ways to pay off student loans:


Student Loans: Related Reading

Is student debt cancellation next?

Student loan borrowers will get $15 billion of student loan cancellation

Student loans will change in 5 major ways in 2022

Biden extended student loan relief, but advocates really want student loan cancellation

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