Navient Cancels $1.7 Billion in Student Loan Debt
Navient Cancels $1.7 Billion in Student Loan Debt
**Update 8/23/2024**
In 2022, a multi-state lawsuit filed against Navient, a servicer of federal student loans, resulted in the cancelation of student loan debt totaling $1.7 billon. This amount covered the private loan debt held by around 66,000 students.
According to the Navient Multi-State Settlement official site, lawsuit payments were distributed in 2022. A deadline to request a check reissue was set for August 31, 2023. Now that this deadline has expired, no reissue requests will be accepted.
Deceptive Practice Allegations
Navient Corporation agreed to the settlement in allegations of deceptive lending practices brought against the company by 39 State Attorneys General. The company maintains its innocence, even after agreeing to the settlement.
“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,” declared Mark Heleen, one of Navient’s legal officers (WSJ).
Navient gave private loans to students with poor credit, many attending institutions with questionable standards. A large number were for-profit schools, who have repeatedly come under fire for promises made to potential military students. For-profit institutions must make at least 10% of their income from non-federal sources in order to accept VA education payments, which can lead them to take desperate measures.
Navient announced its exit from servicing student loans. The company was part of Sallie Mae, but it split off in 2014. A majority of the loans being cancelled were issued before the company left Sallie Mae.
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The Multi-State Settlement
According to the Navient Multi-State Settlement website, the settlement includes $1.7 billion in debt cancellation and $95 million in restitution. Restitution payments of about $260 were distributed to approximately 350,000 federal loan borrowers whose loans were placed in forbearance.
Borrowers whose debts were canceled received a notice and a refund from Navient if they’ve made any payments on the canceled loans.
As an additional measure, Navient was required to explain to its borrowers the benefits of income-driven repayment plans and offer to estimate income-driven repayment amounts before placing borrowers into forbearance.
Additional conduct reforms for Navient included hiring specialists skilled at dealing with student borrowers and Navient was required to counsel any borrowers who are public service workers to inform them of the Public Service Loan Forgiveness (PSLF) program.
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For Borrowers
Those who believed they were affected impacted by the Navient settlement, settlement or restitution payments were sent to the address on file. Borrowers who did not maintain a current address for the loans may have missed a payment sent to the address on file. Not everyone who had loans with Navient will receive forgiveness or restitution. There were conditional requirements:
- Must have studied at certain for-profit institutions
- Received their loans between 2002 and 2014
- Must be at least seven months behind on payments
- Must live in certain states covered by the settlement.
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About the author
Julie Provost is a freelance writer, and blogger. She lives in Tennessee with her National Guard husband and three boys.