- 39 states’ attorneys general reached a $1.85B settlement with Navient to resolve claims of wrongdoing.
- They claimed the student-loan company misled borrowers and steered them into deeper debt.
- Navient denied any wrongdoing and said its decision to settle was to avoid expenses and time in court.
Thousands of student-loan borrowers could get debt relief from one of the nation’s largest student-loan companies.
On Thursday, 39 states’ attorneys general announced a $1.85 billion settlement with student-loan company Navient to resolve allegations of “widespread unfair, deceptive, and abusive student loan servicing practices and abuses in originating predatory student loans,” according to a press release.
Specifically, the settlement resolves claims that Navient steered student-loan borrowers into deeper debt instead of setting them on track for affordable repayment plans, along with originating “predatory” private student-loans for borrowers who attended for-profit schools regardless of their abilities to afford paying those loans back.
As part of the settlement, Navient will cancel $1.7 billion for 66,000 borrowers with private student loans, and it will distribute $95 million in restitution payments — about $260 each — to about 350,000 federal borrowers who were placed in long-term forbearances.
“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 a statement.
Navient denied any wrongdoing in a press release, saying it “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.”
“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.”
This story is breaking and will be updated.