The Navient Deal, at $1.85 Billion, Will Result in the Cancellation of thousands of Student Loans. Still, You Can Anticipate a $260 Check.

By Jessa Martin On Jan 23, 2022

Numerous student loan debtors are likely to receive long-awaited debt relief as a result of a $1.85 billion settlement judgment reached with Navient, one of the nation’s largest student loan servicers, announced Thursday.

If the agreement between the Delaware-based company and attorneys general from 39 states and the District of Columbia is approved by a federal court, it will put an end to state allegations that Navient engaged in unfair, deceptive, and abusive student loan servicing practices when it originated predatory loans.

It is anticipated that around 66,000 borrowers with private education loans who started between 2002 and 2010, when Navient was known as Sallie Mae, will have their outstanding sums canceled under the terms of the deal.

Additionally, 350,000 federal student loan borrowers are projected to receive $260 in restitution payments from Navient as a result of a $95 million reparation payment.

The borrowers, who were having difficulty repaying their debts, were placed in forbearance programs, which caused them to go further into debt, rather than less expensive income-based payment plans.

When the federal government stopped lending to for-profit educational institutions such as Corinthian Colleges and ITT Technical Institutes, the vast majority of those students were forced to leave their programs.

Student loan borrowers would receive “much-needed relief,” according to Pennsylvania Attorney General Josh Shapiro, a key member of the legal alliance that brought the agreement to fruition.

Shapiro said in a statement announcing the agreement that “Navient repeatedly and deliberately put profits ahead of its borrowers – it engaged in deceptive and abusive practices, targeted students who it knew would have difficulty repaying their loans, and placed an unfair burden on people trying to improve their lives through education.”

According to Navient, there was no misconduct on their part, and they agreed to the deal since the state claims had been pending for more than eight years and were nowhere near reaching the trial stage.

According to Mark Heleen, Navient’s chief legal officer, the company’s decision to resolve these actions, which were based on false claims, saves the company the additional burden, expense, time, and distraction of trying to win in court, which would have been otherwise incurred.

“Navient is and has always been committed to assisting student loan borrowers in understanding and selecting the most appropriate payment alternatives for their circumstances.”

A separate case brought against Navient by the U.S. Consumer Financial Protection Bureau, which contains similar allegations, is still pending. In that case, as well, the firm has denied any wrongdoing.

The settlement would also force Navient to convey the benefits of income-driven repayment plans to student loan borrowers before enrolling them in forbearance programs under the terms of the agreement.

Additionally, the corporation would be forced to inform borrowers who are currently employed in public service positions about a federal loan forgiveness program that could assist them in paying off their obligations.

The agreement, according to Mike Pierce, executive director of the Student Borrower Protection Center, is a major achievement.

According to Pierce, “at long last, the student loan debtors who were forced to shoulder the load of risky and exploitative private student loans manufactured by Sallie Mae and controlled by Navient will finally be debt-free.”