$1.7 Billion in Student Loan Cancellation Due to Navient Settlement
39 state attorneys general had been suing Navient, one of the biggest student loan servicers in the US, for years until a deal was announced on Thursday.
When it came to student loan repayment, the complaint said that Navient used unfair and misleading methods, such as encouraging borrowers to opt out of income-driven repayment plans and Public Service Loan Forgiveness (PSLF). Because of the compounding impact and the risk of an unmanageable debt burden, forbearances are risky for borrowers because of the interest that accumulates on their student loans while payments are suspended. In addition, forbearances do not contribute towards debt forgiveness periods, such as the 25-year payback term for Income Based Repayment (IBR) or the 10-year period of public service employment necessary for borrowers on track for the PSLF programme. forbearance
According to the federal Consumer Financial Protection Bureau (CFPB), Navient participated in forbearance-steering activities, which resulted in financial injury to borrowers, a second complaint against Navient was filed in 2017.
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The lawsuit filed by the state’s attorney general claims that Navient generated subprime private student loans for students attending various predatory for-profit colleges. Plaintiffs in the action claim Navient gave these high-interest private student loans to students despite the institutions’ low graduation rates and poor employment prospects….
The following will be included in the settlement:
Students who attended ITT Technical Institutes and the Art Institutes, two for-profit colleges, will be able to erase $1.7 billion in private student loan debt.
Nearly 350,000 borrowers who were in long-term forbearances will get $95 million in reparation payments from Navient. This will cost each borrower around $260.
Federal student loan programmes such as income-driven repayment and Public Service Loan Forgiveness must be better communicated to borrowers, and customer service personnel will no longer be encouraged to conclude phone conversations prematurely.
“Nothing in the settlement conditions… may be considered as or interpreted as an admission or concession of any breach of law, rule, regulation, other matter of fact or law, or any responsibility or wrongdoing,” according to the terms of the settlement. There is no proof that Navient is liable, negligent, or wrongdoing because of the terms of the settlement agreement. As far as Navient is concerned, it has strenuously denied any wrongdoing or damage to student loan customers.
A statement from Pennsylvania Attorney General Shapiro, who spearheaded the lawsuit, stated that “Navient repeatedly and deliberately put profits ahead of its borrowers – it engaged in deceptive and abusive practises, targeted students who it knew would struggle to repay loans, and placed an unfair burden on people trying to improve their lives through education.” This resolution is an important step in correcting Navient’s previous actions, providing much-needed relief to Pennsylvania borrowers, and ensuring that this firm does not prey on student loan consumers in the future.
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Loan borrowers’ advocates welcomed the agreement. Sallie Mae and Navient student loan debtors “will finally be debt free,” said Student Borrower Protection Center Executive Director Mike Pierce in a statement. “It’s been a long time coming,” he said. To the millions of borrowers who had their agony profitably transformed into profit, today’s move is a clear success.”
As stated by the Pennsylvania Attorney General’s office, “Federal loan borrowers who qualify for relief under this settlement need just update or establish their studentaid.gov account to verify that the United States Department of Education has their current address.” The relief that will be offered automatically to private loan holders by the end of July will also apply to them. Borrowers interested in learning more may go to www.NavientAGSettlement.com.
this is the Commonwealth of Pennsylvania case number Attorney General Josh Shapiro v. Navient Corporation and Navient Solutions, LLC, was filed in the Middle District of Pennsylvania U.S. District Court. In addition to Pennsylvania, Washington, Illinois, Massachusetts and California, a number of additional states run by both Democrats and Republicans also participated in the settlement.
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source: forbes
