Navient agrees to $1.7 billion student loan settlement

Navient agrees to $1.7 billion student loan settlement

Navient, one of many nation’s largest student loan providers, agreed Thursday to pay practically $2 billion to settle claims by 38 states and the District of Columbia it deceived hundreds of borrows into pricey, long-term, forbearance plans that precipitated students to pay greater than they need to have.

“They ran a multi-billion dollar scam,” Pennsylvania Attorney General Josh Shapiro mentioned throughout a information convention saying the settlement settlement.

Navient, previously often called Sally Mae, burdened struggling students with debt, the attorneys common mentioned, by pushing them into subprime, non-public loans they knew most can be unable to repay.

“So many people are trapped in unaffordable student loan debt,” Massachusetts Attorney General Maura Healey mentioned. “These loans were doomed to fail from the start and Navient knew it.”

Navient additionally steered students into forbearances as a substitute of counseling them a few extra reasonably priced compensation plan.

“What Navient did was deceive them,” Washington Attorney General Bob Ferguson. “All they got was a push into a bad plan, this forbearance plan.”

When students stopped making funds, as forbearance permits, the debt piled up. The settlement cancels practically $1.7 billion {dollars} in balances owed by 66,000 debtors nationwide.

Borrowers receiving non-public loan debt cancellation will obtain a discover from Navient, together with refunds of any funds made on the cancelled non-public loans after June 30, 2021. Federal loan debtors who’re eligible for a restitution fee of roughly $260 will obtain a postcard within the mail from the settlement administrator later this spring.

Navient has denied any violation of the legislation. “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,” mentioned Navient’s chief authorized officer Mark Heleen in an announcement.

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The settlement contains the states of Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, Washington, West Virginia, Wisconsin, and the District of Columbia.

“Today’s billion-dollar agreement will bring relief to thousands of borrowers in New York and across the nation and help them get back on their feet. Navient will no longer be able to line its pockets at the expense of students who are trying to earn a college degree,” New York Attorney General Letitia James mentioned in an announcement Thursday.

“Americans across the nation are struggling with their student loan debt,” Illinois Attorney General Kwame Raoul mentioned, including Navient “buried students into debt” with non-public loans they might by no means repay. “Today’s settlement provides substantial student loan relief.”

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