Do I qualify for the Navient lawsuit?
The federal student loan servicer, Navient, has reached an agreement with several states on a $1.85 billion settlement which includes debt cancellation.
The student loan servicer, Navient, reached a $1.85 billion settlement on Thursday 13 January with various state leaders that will provide over 400,000 loan holders debt relief.
The settlement is the result of a suit filed by several state Attorney Generals which accused Navient of unfair and predatory practices. Historically, Navient was one of the largest federal student loan servicers, and according to the case has engaged in these sorts of practices for close to two decades.
When the settlement was reached, Navient’s Chief Legal Officer Mark Heleen stated that the company never broke “any law, including consumer-protection laws, or [caused] borrower[s] harm.” Heleen also said the decision to settle was made to “avoid the additional burden, expense, time and distraction to prevail in court.”
However, the emotional harm inflicted by the stress caused by Navient should not be understated. In an interview with CNBC, Pennsylvania Attorney General Josh Shapiro described one scheme used by the company to exploit holders saying.
"Navient had a program where you could actually repay your student loan based on your earnings, right? And instead of steering these student loan holders towards that, they instead put them in a risky scheme where they jacked up the interest rates and ultimately that scheme cost student loan holders four billion dollars."
"That is four billion dollars that they should have never had to pay in the first place," said Attorney General Shapiro.
Who will have their loans canceled under the agreement?
The company has announced that around 66,000 borrowers “who took out certain private student loans, largely between 2002 and 2010, and who subsequently defaulted and met other criteria,” will have their debts canceled.
If you held a Navient loan during this time and attended a for-profit institution of higher education like Corinthian and ITT, which was closed after the “federal government stopped lending at these schools,” you may be one of the impacted borrowers.
Many of the practices that relate to the case occurred from 2002 to 2014 when the company was a unit of Sallie Mae. If your loan will be canceled you do not need to take any actions, rather you will be notified by Navient of the change in status.
Who will receive financial compensation?
As a part of the settlement, some states will distribute “payments directly to certain borrowers through a separate Consumer Fund.” States that will be setting up these funds will distribute those who quality, over 350,000 borrowed a $260 payment.
Like those who will have their balance canceled, those eligible for the payment do not need to take any action. To receive the payment, an “administrator hired by the states will send a postcard to each federal loan borrower eligible for a payment, using the most current address on file with the U.S. Department of Education."
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