39 state attorney general offices reached a settlement with student loan giant Navient this wek. … [+]
Yesterday, 39 state attorney general offices announced that a settlement was reached in ongoing litigation against Navient
The settlement is intended to resolve claims that Navient allegedly improperly steered some federal student loan borrowers into forbearance — instead of federal student loan relief programs like Income Based Repayment and Public Service Loan Forgiveness (PSLF) — and issued high-interest private student loans to borrowers attending predatory for-profit schools where they were unlikely to succeed or be able to repay their loans. Navient has consistently denied any wrongdoing, and the company admitted to no liability as part of the settlement agreement.
The settlement agreement includes provisions for student loan forgiveness for certain Navient private student loans, and modest restitution for some federal student loan borrowers. Here’s what you need to know.
The settlement agreement for Navient provides for $1.7 billion in private student loan cancellation. Here are the details:
Federal student loans are not eligible for cancellation under the settlement. But these borrowers may be eligible for Borrower Defense to Repayment, a federal student loan forgiveness program that can cancel the federal student loan debt for borrowers who were defrauded by their school.
While no federal student loans are being forgiven or cancelled under the settlement agreement with Navient, many borrowers will receive a modest financial award called restitution. About 350,000 borrowers will be eligible for around $95 million in restitution, which comes out to around $260 to $270 per borrower. There are eligibility criteria:
The relief being provided under the Navient student loan settlement will be distributed automatically. Borrowers should be notified sometime this summer if they qualify. All borrowers need to do is make sure that their contact information is up to date, particularly with their federal student loan servicer and StudentAid.gov, the Department of Education’s federal student aid website. There is no application process for borrowers to request relief.
For more information, borrowers can visit www.NavientAGSettlement.com, and they can also contact their state attorney general’s office (some have set up specific websites to help guide their residents).
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