As we all patiently wait to see if the Biden administration will make good on its campaign promise to cancel up to $10,000 of student loan debt, there was some other major news regarding one of the biggest loan companies. Thirty-nine state attorney generals announced on Thursday that Navient agreed to cancel $1.7 billion in debt owed by more than 66,000 borrowers across the U.S., and pay over $140 million in other penalties to settle allegations of abusive lending practices.
Pennsylvania’s attorney general Josh Shapiro, who headed negotiations, had this to say in a statement according to the Associated Press:
Navient “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.
Among other things, he said, Navient misled borrowers who were having trouble making payments into entering what are known as long-term forbearances, which caused them to run up even more debt.
The complete terms of the settlement are as follows as noted by Forbes:
- $1.7 billion in private student loan cancellation for borrowers who attended certain for-profit institutions, like ITT Technical Institutes and the Art Institutes.
- Navient will pay $95 million in restitution payments to approximately 350,000 federal student loan borrowers who were placed in certain types of long-term forbearances. This will amount to roughly $260 per borrower.
- Navient will be required to improve communications with borrowers about federal student loan programs such as income-driven repayment and Public Service Loan Forgiveness and to remove incentives for customer service representatives to end phone calls with borrowers prematurely.
Now, for the question you are here for, who qualifies for this settlement? Forbes offers some guidance:
The relief being provided under the Navient student loan settlement will be distributed automatically. Borrowers should be notified sometime this summer if they qualify. All borrowers need to do is make sure that their contact information is up to date, particularly with their federal student loan servicer and StudentAid.gov, the Department of Education’s federal student aid website. There is no application process for borrowers to request relief.
For more information, borrowers can visit www.NavientAGSettlement.com, and they can also contact their state attorney general’s office (some have set up specific websites to help guide their residents).
Forbearance can be costly, especially when considering all the added interest. This settlement is a significant step for people across the country who have monthly payments the size of a mortgage. Sixty-six percent of Black borrowers stated they regret taking out loans for college.
Hopefully, this will be a step in an even bigger movement to cancel and reduce student loan debt and address the cost of college as a whole.