Student loan servicer Navient will finally have to cancel $1.7 billion in private student loan debt for roughly 66,000 students, the New York Times reported Thursday. The loan cancellation is a part of deal reached between Navient and 38 states, and Washington, D.C., for a sum of $1.85 billion.
Navient was accused of predatory practices such as encouraging borrowers to postpone payments to their private loans in lieu of counseling them on income-based repayment plans. The legal probes into the company’s practices date back to 2009 and prompted the deal to include $95 million of restitution payments to be split between more than 350,000 borrowers in “long-term forbearances,” Reuters reported. Those who qualify for forgiveness don’t have to opt into the settlement. After the court approves the final settlement later this year, qualified borrowers will receive a notification from Navient, CNN reported.
Pennsylvania Attorney General Josh Shapiro said at a press conference that he is still paying off his own student loans. “Navient knew that people relied on their loans to make a better life for themselves and for their children. Instead of helping them, they ran a multibillion dollar scam,” he told reporters.
Despite agreeing to the settlement, Navient, once the country’s largest student loan servicer, is vehemently denying harming their borrowers or breaking any laws. “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 in a statement.
Congratulations to the roughly 66,000 borrowers who will see their predatory private student loans forgiven and to the 350,000 getting a check! I hope the Biden administration takes notes about this easy way to earn back voters’ trust as the federal student loan pause remains until May 2022.