Navient has agreed to forgive $3.5 million in 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 forgiveness for, in the words of New Hampshire Attorney General John Formella, “victims of Navient’s unlawful and harmful practices. “. The consent judgment resolves several allegations, according to Formella, that Navient:
- Created subprime student loans in New Hampshire that Navient waited for, and eventually defaulted, at high rates;
- Made billing and payment systems difficult for student loan borrowers and co-signers, which affected their ability to allocate their student loan payments;
- Placed some student borrowers who were experiencing long-term financial difficulties in student loan forbearance rather than an income-driven repayment plan, which ultimately hurt these student borrowers; and
- Unable to provide student borrowers with renewal notices for income-contingent repayment plans.
Student Loan Forgiveness: How Navient Will Change Its Practices
The affected student loans that will be canceled were private education loans taken out primarily between 2002 and 2010 and subsequently defaulted. Navient will contact the 129 student borrowers eligible for this student loan cancellation in the coming months. To get a student loan forgiven, borrowers do not need to apply or take any other proactive steps. Under the terms of the consent judgment, Navient will also make several enhancements to customer service and student loan servicing, including:
- explain the benefits of income-tested repayment plans to student borrowers;
- propose estimating student loan repayment amounts based on income before forcing student borrowers to forgo student loans;
- process student loan payments quickly and accurately;
- make student loan repayment history available to borrowers,
- apply additional student loan payments to student loans with the highest interest rates, allowing borrowers to save student loan interest; and
- informing student borrowers applying for public service loan forgiveness of the limited relief that is available until October 31, 2022 and may help them get student loan forgiveness sooner.
In January, Pennsylvania Attorney General Josh Shapiro announced that Navient had agreed to forgive $1.7 billion in risky private student loans owed by 66,000 student borrowers, mostly at for-profit schools such as the ‘ITT Technical Institute and the Art Institute. Under the settlement, Navient also agreed to pay $95 million in restitution payments of approximately $260 each to approximately 350,000 federal 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 unsubstantiated claims, allows us to avoid the additional burden, expense, time and distraction that prevails in court,” said the General Counsel. of Navient, Mark Heleen, following the major settlement announced in January. “Navient is and has always been focused on helping student borrowers understand and select the right payment options to meet their needs. In fact, we’ve increased enrollment in income-contingent repayment plans and reduced default rates, and every year hundreds of thousands of borrowers we support successfully repay their student loans. Navient has specifically denied breaking any law, including consumer protection laws, or causing harm to student borrowers.
Will your student loans be forgiven?
Will your student loans be forgiven? The $1.7 billion Navient settlement affected 66,000 student borrowers. This student loan forgiveness involves private student loans, private student loan service, and is limited to certain student borrowers. That said, if you do not qualify for this student loan forgiveness, there is a potential opportunity for a large student loan forgiveness. In contrast, President Joe Biden is evaluating large-scale federal student loan relief. If Biden cancels student loans, it could potentially provide permanent student loan forgiveness to millions of student borrowers. However, income limits could prevent millions of student borrowers from accessing student loan forgiveness. Over the next few months, temporary student loan relief will end, which means federal student loan repayments will resume. Are you ready? Explore these options to pay off your student loans faster:
Student Loans: Related Reading
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Disclosure: Navient has an affiliate relationship with Mentor.