Do You Have Student Loans With Navient? If So, You May Benefit From a Recent $1.85 Billion Settlement
March 11, 2022
On January 13, 2022, 39 states, including Florida, signed a $1.85 billion settlement agreement with Navient Corporation over allegations of abusive lending practices. Navient denies any wrongdoing. However, under the terms of the agreement, Navient will cancel $1.7 billion in private student loan debt for approximately 66,000 borrowers nationwide, and make restitution payments of $260 to approximately 350,000 federal student loan borrowers. Although the settlement hasn’t been approved by the court yet, it is likely that soon the judge overseeing the case will approve the settlement.
What Was Navient Accused Of?
Formerly doing business as Sallie Mae, Navient is one of the largest student loan servicers in America. Navient is alleged to have steered student loan borrowers into forbearance agreements instead of encouraging income-driven repayment plans. Forbearance stops payments from being due, but it does not stop interest from accruing, and the student loan debt increases. When you read about people starting out with, for example, a $20,000 student loan that over time balloons into a $100,000 loan, it is because of accrued interest that is added to the balance. These long-term forbearance agreements have made it almost impossible for many borrowers to ever pay off their loans, which increases their financial hardship.
Additionally, Navient is alleged to have not explained to federal student loan borrowers that there are income driven repayment options available under various federal programs. For example, if a borrower had no income or very low income based on their family size, some of the income driven federal programs could have resulted in a $0.00 monthly payment and would be earning credit toward a future forgiveness. Instead, Navient pushed borrowers into forbearance, which paused payments but does not count toward future forgiveness. Navient was also accused of not applying payments correctly and other related student loan servicing requirements.
Navient Is Alleged To Have Made Subprime Loans To Students At For-Profit Schools And Colleges With Low Graduation Rates
Many students take out student loans with the belief that it will be worthwhile financially in the long run to better themselves and get the education for a higher-paying job. And often, that is true. However, not always. Navient is alleged to have knowingly made risky subprime private loans to students at schools with low graduation rates or low hiring rates after completion of the program. Borrowers who dropped out or were unable to find jobs were saddled with often insurmountable amounts of debts.
Navient Payout Much Larger For Private Student Loan Borrowers In Three Categories
Navient has agreed to forgive a minimum of $1.7 billion in private student loan debt for borrowers that meet specific eligibility criteria. According to the consent judgment, to qualify for one of the three categories the loan must be charged off. We can review your student loans to see if you meet the “charged off” requirements and criteria. If your loans were originally issued by Sallie Mae Bank, or if you went to one of the following schools, your private student loans might be eligible for forgiveness.
ACT, ABC Training Center of Maryland, TCI
Career Education Corporation
Center for Excellence in Higher Education
Education Corporation of America (Willis Stein & Partners III, L.P.)
Education Management Corporation
Globe/MN School of Business
ITT Technical Institute
Marinello School of Beauty
Premier Education Group
What The Forgiveness Covers
The forgiven amount will include all outstanding principal balance, accrued interest, and fees. In order to qualify, the borrower’s last known address must be in one of the Signatory Attorney General States, or a military address postal code. If a student loan borrower lives in a state that did not participate in the multi-state action against Navient, then the loans will not be forgiven. Fortunately for Floridians, Florida participated.
What Do You Need To Do?
According to the settlement, if you are eligible for restitution (federal student loan borrowers) or for loan forgiveness (private student loan borrowers), you do not need to do anything. Navient will contact you directly sometime this spring for federal student loan restitution, and this summer for private student loan forgiveness. So, the most important thing you can do is make sure that your contact information is up to date with your student loan servicer. Until you are certain that you are qualified to benefit from the settlement, you should continue to make your student loan payments.
BransonLaw Can Help
Our office will be following this settlement closely and will advocate for clients to get what they deserve under the settlement. Although student debt is generally not dischargeable in bankruptcy, the tide seems to be turning. Just recently the Department of Justice announced it would dismiss an appeal in a bankruptcy case in which a debtor prevailed on discharging their student loans. If you have student loan debt and would like our office to see what options you have, call us today. Our team is ready to help you.