Major student loan processor cancels $ 1.7 billion in debt| News Today

Navient, one of the nation’s largest student loan processors, will write off 66,000 student debt of $ 1.7 billion following an agreement to settle a lawsuit with 39 states and the District of Columbia.

“Navient has repeatedly and deliberately put profits ahead of his borrowers – he engaged in deceptive and abusive practices, targeted students he knew would have difficulty repaying their loans, and imposed a burden unfair to people trying to improve their lives through education, ”Pennsylvania said. Attorney General Josh Shapiro, a Democrat and one of the attorneys general suing the company.

The $ 1.7 billion in canceled debt is entirely for private student loans, which are not guaranteed by the federal government. Navient will also pay $ 95 million in restitution to 350,000 federal student loan borrowers who have been placed in certain long-term forbearance programs.

Navient did not admit any fault in the regulations and maintains that he did nothing illegal. The company has a long history of managing federal student loans on behalf of the Department of Education, although it will hand these tasks over to another agent in 2022.

The lawsuits against Navient began five years ago and focused on accusations that Sallie Mae, Navient’s predecessor company, had made loans to borrowers she knew were likely to default, as well as over allegations Navient steered borrowers into expensive forbearance programs instead of cheaper income-based repayment options. .

Most of the canceled loans are “subprime loans” that went to students attending for-profit colleges, who often had graduation rates below 50%. This made it unlikely that the students would ever be able to repay the loans.

A federal court has yet to approve the settlement. Borrowers eligible for assistance simply need to make sure the Education Department has up-to-date addresses for them, Shapiro’s office said, and should be notified if they receive assistance in the spring or early. of summer.

Another lawsuit against Navient, filed by the Federal Bureau of Consumer Financial Protection, is still pending. This lawsuit alleges that Navient cheated the borrowers, forcing them to make higher payments than necessary.