Student loan service Navient settled a $1.85 billion lawsuit late last week, resulting in more than $1 billion in student loan forgiveness and settlement payments for eligible borrowers. Here’s what you need to know about this week’s student loan trends and how they can affect your payments.
1 The current trend of student loans for the week of January 17, 2022
1. Navient files $1.85 billion lawsuit over alleged deceptive lending practices
Last week, a settlement with student loan service Navient resolved several lawsuits accusing the server of deceptive and unfair lending practices. Prosecutors from California, Illinois, Massachusetts, Pennsylvania and Washington led the lawsuit last week, with 38 states and Washington, D.C., finally joining.
Navient allegedly pushed student loan borrowers into unnecessary and costly bearing periods when they were instead eligible for income-based repayment or Public Service Loan Forgiveness (PSLF). The servant was also accused of providing loans to students whom the company knew would likely not be able to repay the debt.
Navient denies allegations that it violated consumer protection laws or caused harm to the borrower. “The company’s decision to resolve these matters, which were based on unsubstantiated allegations, allows us to avoid the additional burden, expense, time and distraction in court,” Navent Chief Legal Officer Mark Helen said in a press release.
How does this affect student loans?
Eligible borrowers in 38 states and Washington, DC will benefit from the settlement agreement. Navient is required to forgive $1.7 billion in private student loan debt for borrowers who took out certain loans with the company and later defaulted. This will primarily affect borrowers who attended for-profit schools and who borrowed between 2002 and 2010.
Navient will also distribute individual redemption payments of approximately $260 to 350,000 borrowers who have been put into hardship.
Although the server has moved its federally owned student loan products to Aidvantage, a service unit of Maximus, it will continue to service private loans and privately owned FFELP loans. Navient is now required to notify borrowers of all repayment options, including income-based repayment and PSLF, before proposing an incurrence. It will also train non-incentive professionals to assist borrowers with questions about their forgiveness or eligibility for repayment.
Other than making sure their current residential address is correct, Navient borrowers do not need to take further action. Forgiveness qualifiers will receive information from Navient regarding their balance no later than July 2022, and borrowers who receive a compensation payment can expect a postcard from a settlement administrator in Spring 2022.
Eligible Navient borrowers can be forgiven of their student loan balance after a $1.85 billion settlement.
Here’s how you can prepare
Whether you’re new to student loans or just in the process of paying off, it’s wise to stay updated on how student loan rates are changing. During 2022, more opportunities for cheaper loans or loan forgiveness may open up; Keep an eye on Bankrate’s Student Loan News Center for the latest trends.