Navient paying $1.85B over claims of predatory student loan practices
Navient, one of the nation's largest student loan services, reached a $1.85 billion settlement with a coalition of 39 state attorneys general to resolve allegations of predatory student loan servicing practices.
Driving the news: "Today’s settlement corrects Navient’s past behavior, provides much needed relief to Pennsylvania borrowers, and puts in place safeguards to ensure this company never preys on student loan borrowers again," Pennsylvania Attorney General Josh Shapiro said in a statement.
- The deal, announced Thursday, requires Navient to cancel $1.7 billion in private student loan debts for nearly 66,000 borrowers and pay $95 million in restitution.
- The coalition of attorneys general claimed that since 2009, Navient has "steered struggling student loan borrowers into costly long-term forbearances instead of counseling them about the benefits of more affordable income-driven repayment plans," according to a statement.
- The coalition also alleged that Navient originated private loans for for-profit schools, often those with low graduation rates, "even though it knew that a very high percentage of such borrowers would be unable to repay the loans."
The other side: Navient said in a statement that it "denies violating any law, including consumer-protection laws, or causing borrower harm."
- "The company’s decision to resolve these matters, which were based on unfounded claims, allows us to avoid the additional burden, expense, time and distraction to prevail in court," said Navient’s chief legal officer Mark Heleen.
- "Navient is and has been continually focused on helping student loan borrowers understand and select the right payment options to fit their needs."