One of the nation’s largest student loan managers has reached a $1.85 billion settlement with 39 states to settle claims it has engaged in predatory lending practices.
As part of the agreement, Navient will cancel private loans for approximately 66,000 borrowers at a cost of $1.7 trillion. In addition, the company will pay restitution of $95 million to 350,000 other borrowers. These borrowers, who have been placed on long-term forbearance by Navient, will receive $260 each.
Navient was sued by 39 states, which claimed the company gave loans to people attending private colleges with low graduation rates, knowing they were unlikely to repay them if and when they graduated . Additionally, the company directed those who were unable to pay into their forbearance program. Program borrowers did not have to make payments on their loans but continued to accrue interest, which pushed them into more debt.
“Navient knew that people were counting on their loans to improve their lives and the lives of their children, and instead of helping them, they staged a multi-billion dollar scam,” the Pennsylvania attorney general said. Josh Shapiro said at a press conference announcing the settlement.
“Navient repeatedly and deliberately put profits ahead of its borrowers – it engaged in deceptive and abusive practices, targeted students it knew would have difficulty repaying their loans, and imposed a burden unfair to people trying to improve their lives through education,” he added. .
Navient denied breaking the law and said it was in his best interest to settle the six court cases he was facing.
“The company’s decision to resolve these issues, which were based on unsubstantiated claims, allows us to avoid the additional burden, expense, time and distraction that prevails in court,” said the General Counsel. by Navient. Marc Helene.