Navient has agreed to cancel $3.5 million of student loans.
Here’s what you need to know.
Navient, one of the nation’s leading student loan servicers, has agreed to student loan debt cancellation for, in the words of New Hampshire Attorney General John Formella, “victims of Navient’s illegal and harmful practices.” The consent judgment resolves several allegations, according to Formella, that Navient:
- Originated subprime student loans in New Hampshire that Navient expected, and which ultimately did, default at high rates;
- Made billing and payment systems difficult for student loan borrowers and cosigners, which hurt their ability to allocate their student loan payments;
- Placed some student loan borrowers who were experiencing long-term financial distress into student loan forbearance rather than an income-driven repayment plan, which ultimately hurt these student loan borrowers; and
- Failed to provide student loan borrowers for renewal notifications for income-driven repayment plans.
Student loan forgiveness: how Navient will change its practices
The impacted student loans that will be canceled were private education loans originated primarily between 2002 and 2010 and later defaulted. Navient will contact the 129 student loan borrowers who qualify for this student loan cancellation in the coming months. To get student loan cancellation, student loan borrowers don’t need to apply or take other proactive steps. Under the terms of the consent judgment, Navient will also make several improvements to customer service and student loan servicing, including:
- explain the benefits of income-driven repayment plans to student loan borrowers;
- offer to estimate income-driven student loan payment amounts before directing student loan borrowers into student loan forbearance;
- process student loan payments quickly and accurately;
- make student loan payment history available to borrowers,
- apply extra student loan payments to student loans with the highest interest rates, thereby saving borrowers student loan interest; and
- advise student loan borrowers who are pursuing public service loan forgiveness about the limited waiver that is available through October 31, 2022 and that can help them get student loan forgiveness faster.
In January, Pennsylvania Attorney General Josh Shapiro announced that Navient agreed to cancel $1.7 billion in subprime private student loan debt owed by 66,000 student loan borrowers, primarily at for-profit schools such as ITT Technical Institute and the Art Institute. Under the terms of that settlement, Navient also agreed to 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 student loan forbearance. The settlement was joined by 39 state attorneys general.
“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 following the major settlement announced in January. “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.” Navient expressly denied violating any law, including consumer-protection laws, or causing harm to student loan borrowers.
Will your student loans get canceled?
Will your student loans get canceled? The $1.7 billion Navient settlement impacted 66,000 student loan borrowers. This student loan cancellation involves private educational loans, a private student loan servicer and is limited to select student loan borrowers. That said, if you don’t qualify for this student loan cancellation, there is a potential opportunity for broad student loan forgiveness. In contrast, President Joe Biden is evaluating wide-scale student loan relief of federal student loans. If Biden cancels student loans, it could potentially provide permanent student loan forgiveness for millions of student loan borrowers. However, income limitations could prevent millions of student loan borrowers from accessing student loan cancellation. In the coming months, temporary student loan relief will end, which means federal student loan payments will restart. Are you prepared? Explore these options to pay off your student loans faster:
Student Loans: Related Reading
How to qualify for $17 billion of student loan forgiveness
Bill Maher: Student loan forgiveness is a “loser” issue
Education Secretary suggests student loan payments will restart
How to get a fresh start on your student loans
Disclosure: Navient has an affiliate relationship with Mentor.
Biden administration unveils defense of student loan forgiveness plan at Supreme Court
Big Student Loan Forgiveness Update As Education Department Clarifies Eligibility For One-Time Adjustment
How Business Owners Can Compare Regular Loans And Lines Of Credit