Navient agrees to cancel 66,000 student borrowers’ loans to settle claims of predatory lending.
Ms. Hardin enrolled in the Brooks Institute of Photography, one of the schools covered by the settlement, in 2006. After nearly a decade of payments, which included a period of forbearance, she fell into delinquency during the pandemic. Ms. Hardin, 38, said she had to choose between paying for health insurance or for her private student loans, which cost more than $1,025 a month.
Ms. Hardin, who now runs a sandwich truck with her husband in Seattle, stands to have roughly $118,000 in debt wiped away.
“This has been a long time coming and justice was definitely served,” she said.
The settlement would end a major portion of a set of linked legal actions that began five years ago, when federal and state prosecutors sued the company, which was at the heart of the student debt collection system.
The Consumer Financial Protection Bureau sued in federal court over what it called mistakes and tactics by Navient that inflated borrowers’ bills by billions of dollars. Several state attorneys general also filed state lawsuits claiming that Sallie Mae — Navient’s predecessor company, from which it split off in 2014 — made private, subprime loans to borrowers it knew had weaker credit and were likely to default.
Those claims are the focus of the settlement that was announced on Thursday, but it also resolved the states’ charges that Navient inflated borrowers’ bills by steering federal loan borrowers into costly long-term forbearance instead of more affordable income-based repayment plans. The deal calls for payments of around $260 per person to be distributed to 350,000 borrowers who were placed in certain forbearance programs. The consumer bureau’s lawsuit, which also centers on those claims, is continuing.
Under the agreement, which was submitted to the U.S. District Court for the Middle District of Pennsylvania for approval, Navient will also pay the participating states $145 million.
If the settlement is approved, Navient will notify the borrowers whose debts will be forgiven. Details of the deal were posted by the participating states on a new website, NavientAGsettlement.com.
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