Navient, a student loan processor, will cancel the private loans of about 66,000 borrowers for $1.7 trillion as part of a contract with 39 states.
Furthermore, the firm will repay another 350,000 borrowers with $95 million in restitution.
According to WHP580, Navient’s long-term forbearance program will bring $260 to each of the borrowers.
39 states had sued Navient for lending money to students at private colleges with low graduation rates knowing that they would not be able to repay the money if and when they graduated.
Additionally, the company took those who couldn’t pay into its forbearance program, the states reported.
Loans under this program were able to be repaid by borrowers but accrued interest, putting them further in debt.
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“Navient knew that people relied on their loans to make a better life for themselves and for their children, and instead of helping them, they ran a multibillion-dollar scam,” Pennsylvania Attorney General, Josh Shapiro announced.
“Navient repeatedly and deliberately put profits ahead of its borrowers — it 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,” he continued.
Navient rebutted that it broke the law saying it has always made sure to resolve the six legal cases it faces.
“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,” Chief legal officer at Navient, Mark Heleen said.
