The largest student loan servicer in the US, Navient, reached an agreement with 39 attorneys general on Thursday to settle for a $1.86 billion deal.
According to CNET, Navient agreed to pay $95 million to borrowers who were unduly placed in long-term forbearances after canceling $1.7 billion in private student loans for almost 66,000 borrowers.
In spite of the fact that Navient is not a lender, it manages student loan repayment for the US government.
Navient, however, has chosen to stop servicing federal student loans from the year 2021.
During the time ruling, the company was accused of committing abusive and deceptive practices, such as targeting students it knew would have difficulty paying off loans.
In addition to the settlement, federal student loan repayments are being paused because the omicron’s surge last month prompted an extension of the moratorium.
As such, Student loan repayments are suspended until May 1.
As well, the Department of Education recently announced that it would extend its Public Service Loan Forgiveness Program to more than 500,000 student borrowers.
“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,” Attorney General of Pennsylvania, Josh Shapiro, stated.
Shapiro explained that the settlement corrects Navient’s past misconduct while establishing “safeguards to ensure this company never preys on student loan borrowers again.”
In the settlement, Navient does not admit any fault, and “denies violating any law, including consumer-protection laws, or causing borrower harm,” the company stated. In an effort to save up legal fees, the student loan servicer is settling the claims.
Upon settlement, Navient promised to “maintain servicing practices that support borrower success.”