BY Lake SydneyJanuary 13, 2022, 5:31 PM
Pennsylvania Attorney General Josh Shapiro speaks during the press conference at the Council on Chemical Abuse RISE Center in Reading, Pennsylvania as seen in April 2021. (Photo by Ben Hasty—MediaNews Group/Reading Eagle/ Getty Images)
Pennsylvania Attorney General Josh Shapiro announced Thursday that Navient, one of the nation’s largest education loan servicers, will write off $1.7 billion in private student loan debt to resolve the allegations. misleading service practices.
Navient announced plans in September to exit the federal student loan servicing industry, and the company had been questioned by 39 state attorneys general over “allegations of widespread unfair, deceptive and abusive student loan servicing practices and ‘abuse in granting predatory student loans,’ according to a statement released by Shapiro’s office.
Nearly 66,000 private student borrowers across the United States will benefit from Navient’s cancellations as a result of the settlement, which totals $1.85 billion.
“Navient repeatedly and deliberately put profits ahead of its borrowers – it engaged in deceptive and abusive practices, targeted students it knew would struggle to repay their loans, and imposed a burden unfair to people trying to improve their lives through education,” Shapiro said. in the statement.
Navient denies the allegations and calls the allegations “unsubstantiated”. Mark Heleen, Navient’s chief legal officer, said in a statement Thursday that the company “is and has been continually focused on helping student borrowers understand and select the right payment options to meet their needs.”
“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,” Heleen added.
Who gets forgiveness?
According to Navient, the company will write off debt for borrowers who took out loans “largely between 2002 and 2010 and then defaulted and were written off.”
These borrowers were tricked by two ‘schemes,’ according to Shapiro: Navient made private subprime loans to borrowers the company knew they couldn’t afford to repay, and Navient allegedly pressured the borrowers into forbearance. , which prevented them from repaying. their loan principal balance, leading many borrowers to “accumulate more debt and endless interest payments,” Shapiro said in a statement.
Once the company receives final court approvals, it will notify borrowers who will have their private debt forgiven.
According to the attorney general’s office, an additional $95 million of the settlement money will be used to make restitution payments of about $260 each to about 350,000 federal student borrowers who have been subject to long-term forbearances.
Navient will notify all 66,000 private student borrowers by July 2022, and eligible borrowers will receive refunds on all payments made on private loans canceled after June 30, 2021. Eligible borrowers don’t have to do anything to have their debt private is cancelled. .
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