A major student loan servicing company has reached a settlement that will cancel $1.7 billion in student loan debt for around 66,000 borrowers, as well as provide $95 million in restitution – around $260 each – to 350,000 borrowers.
“Today’s settlement corrects Navient’s past behavior . . . and puts in place safeguards to ensure this company never preys on student loan borrowers again,” said Pennsylvania Attorney General Josh Shapiro in a statement.
Navient’s settlement with attorneys general in 39 states is over two primary accusations:
- Redirecting borrowers into forbearance instead of pushing them toward more sensible income-based repayment options.
- Through its predecessor, Sallie Mae, directing borrowers to subprime loans that they knew would likely default.
“Navient repeatedly and deliberately put profits ahead of its borrowers – it engaged in deceptive and abusive practices, targeted students who it knew would struggle to pay loans back, and placed an unfair burden on people trying to improve their lives through education,” said Shapiro.
Here’s what you need to know about the settlement.
How to Find Out if the Navient Settlement Affects You
If you’re unsure who your loan servicer is, you can easily find out by logging into your account at studentaid.gov.
You should be able to identify the types of loans you have as well as your servicer through your account dashboard. Or you can call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.
According to the settlement statement, borrowers who qualify don’t need to take any further action other than to make sure the U.S. Department of Education has their current address through their studentaid.gov account.
Borrowers who qualify for private loan debt cancellation will receive a notice from Navient by July 2022 and will be refunded any payments made on canceled private loans after June 30, 2021.
Federal loan borrowers receiving the approximate $260 restitution payment will receive a postcard from the settlement administrator in the spring of 2022.
Tips for Anyone Struggling With Student Loan Debt
Nationally, some 43 million borrowers owe a total of $1.6 trillion in student loan debt. More than 5 million of them are in default.
While wholesale student loan forgiveness remains a distant possibility, it’s best to use the extended forbearance period to your advantage and make a debt payoff plan.
Here are some strategies for paying down your student debt — fast and forever — including checking into whether you qualify for Public Service Loan Forgiveness.
If you’re nearing retirement and still owe on student loans, here are six ways to cope.
Robert Bruce is a senior writer for The Penny Hoarder.