Navient reaches $1.85 billion settlement over predatory loan claims
Ms Hardin enrolled at the Brooks Institute of Photography, one of the schools covered by the settlement, in 2006. After nearly a decade of payments, which included a period of forbearance, she lapsed into delinquency during the pandemic. Ms Hardin, 38, said she had to choose between paying for her health insurance or her private student loans, which cost more than $1,025 a month.
Ms Hardin, who now runs a sandwich truck with her husband in Seattle, hopes to have a debt of around $118,000 cleared.
“It’s been a long time coming and justice has definitely been served,” she said.
The settlement would end much of a series of related lawsuits that began five years ago when federal and state prosecutors sued the company, which was at the heart of the debt collection system. student debt.
The Consumer Financial Protection Bureau sued in federal court over what it called Navient’s mistakes and tactics that inflated borrowers’ bills by billions of dollars. Several state attorneys general have also filed lawsuits claiming that Sallie Mae — Navient’s predecessor company, which it spun off in 2014 — made risky private loans to borrowers it knew had a weaker credit and were likely to default.
Those claims are the focus of the settlement that was announced Thursday, but it also resolved state accusations that Navient inflated borrowers’ bills by steering federal borrowers into costly long-term forbearance instead of higher repayment plans. affordable based on income. The deal calls for payments of around $260 per person to be distributed to 350,000 borrowers who have been placed in certain forbearance programs. The Consumer Affairs Office’s lawsuit, which is also focused on those claims, is continuing.
Under the agreement, which has been submitted for approval by the U.S. District Court for the Central District of Pennsylvania, Navient will also pay participating states $145 million.
If the settlement is approved, Navient will notify the borrowers whose debts will be forgiven. Details of the agreement have been posted by participating states on a new website, NavientAGsettlement.com.