On Thursday, Pennsylvania Attorney General Josh Shapiro announced that Navient, the country’s largest student loan servicer, will pay $1.85 billion to resolve allegations of “widespread unfair, deceptive, and abusive student loan servicing practices and abuses in originating predatory student loans.”
The payment comes as a settlement in a long-standing g lawsuit joined by 39 state attorneys general against the company.
The lawsuit claimed that Navient engaged in unfair and deceptive practices by steering student loan borrowers into forbearances and away from critical federal student loan relief programs such as the income-driven repayment plans and Public Service Loan Forgiveness (PSLF).
The student loan cancellation will impact approximately 66,000 private student loan borrowers. Eligible private student loan borrowers should receive a notice from Navient by July 2022, along with refunds of any payments made on the canceled private loans after June 30, 2021.
“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 in a statement.
Navient still denies wrongdoing and in a press release the executives of the company continued to push back against the claims.
“The company’s decision to resolve these matters, which were based on unfounded claims, allows us to avoid the additional burden, expense, time and distraction to prevail in court,” says Navient’s Chief Legal Officer Mark Heleen.
