by Lake SydneyJanuary 13, 2022, 5:31 pm
Pennsylvania Attorney General Josh Shapiro speaks during the press conference at the Chemical Abuse Control Board’s RISE Center in Reading, Pennsylvania, as seen in April 2021. (Photo by Ben Hesty-MediaNews Group/Reading Eagle/Getty Images)
Pennsylvania Attorney General Josh Shapiro announced Thursday that Navient, one of the nation’s largest education loan management firms, will cancel $1.7 billion in private student loan debt to resolve allegations of deceptive service practices.
Navient announced its plans in September to leave the federal student loan service industry, and has been investigated by 39 state attorneys general for “allegations of the spread of unfair, fraudulent, and abusive student loan service practices in the creation of predatory student loans,” according to a statement from Shapiro’s office.
Nearly 66,000 private student loan borrowers across the United States will benefit from Navient’s cancellation as a result of the settlement, totaling $1.85 billion.
“Navient repeatedly advances profits ahead of borrowers — it has engaged in deceptive and abusive practices, it has targeted students it knew would struggle to repay loans, and it placed an unfair burden on people trying to improve their lives through education,” Shapiro said in the statement.
Navent denies the allegations, calling them “baseless”. Mark Helen, Navient’s chief legal officer, said in a statement Thursday that the company “has been consistently focused on helping student loan borrowers understand and choose appropriate payment options to suit their needs.”
“The company’s decision to resolve these matters, which was based on unfounded claims, allows us to avoid the additional burden, expense, time and distraction in court,” Helen added.
Who gets forgiveness?
According to Navient, the company will cancel the debts of borrowers who created loans “largely between 2002 and 2010 and then defaulted and were discounted.”
These borrowers were deceived by “schemers,” according to Shapiro: Navient issued high-risk private loans to borrowers the company knew they would not be able to repay; In a statement, Shapiro said Unaventure has pushed borrowers into impatient, preventing them from repaying their principal loan balance, leading many borrowers to “accumulate more debt and endless interest payments.”
After the company receives final approvals from the court, it will notify borrowers whose private debts will be cancelled.
Another $95 million of the settlement money will be used to make compensation payments of about $260 each to about 350,000 federal student loan borrowers placed in long-term relationships, according to the attorney general’s office.
Navient will notify 66,000 private student loan borrowers by July 2022, and eligible borrowers will receive refunds on any payments made on canceled private loans after June 30, 2021. Eligible borrowers do not need to do anything to cancel their private debt.
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