A student loan lawsuit settlement was reached between Navient and borrowers who filed suits against them. The settlement covers up to $1.7 billion in private student loan debt cancellation and another $90.5 million in restitution to federal student loan borrowers. This settlement affects 66,000 borrowers. In this article, we will discuss the terms of the settlement and what it means for borrowers. This article also highlights the importance of keeping track of student loan settlement news.
$1.7 billion in private student loan debt cancellation
The federal student loan program provides a vital lifeline for colleges and universities, but in some cases, schools are unable to meet their financial obligations, and borrowers are left with massive debt. A new lawsuit, filed against Navient Corp., alleges that Navient knew that most borrowers would not be able to pay back their debts but still sought preferred lender status with many schools. In a recent settlement, Navient agreed to cancel $1.7 billion in private student loan debt and compensate affected students. The $1.7 billion will be paid to approximately 66,000 borrowers, and federal loan borrowers will receive restitution payment of $260.
Navient has agreed to cancel 66,000 private student loans and pay a one-time payment to 39 state attorneys general, as well as provide restitution for select federal student loan borrowers. The lawsuits allege that Navient improperly disbursed student loans to students who weren’t able to pay them. While Navient has denied any wrongdoing, it is still obligated to repay its borrowers, and the company has already agreed to pay a one-time payment of $145 million to the states.
$95 million in restitution
Navient, the nation’s largest private student loan servicer, has agreed to settle a student loan lawsuit involving misconduct. The company was accused of mistreating financially struggling customers by forcing them to take out long-term forbearance plans to avoid making payments. In addition to $95 million in direct restitution, Navient has agreed to erase the debt of more than 400,000 borrowers.
A federal court ruled in January that Navient is liable for the debts of 350,000 federal student loan borrowers. In exchange, Navient agreed to pay $95 million in restitution to these borrowers, an average of $260 per borrower. The settlement will require Navient to improve communication with borrowers and eliminate incentives for customer service representatives to end calls early. The amount of restitution awarded to each borrower will depend on their income level, but the restitution amount is large.
$95 million in lump-sum payments for federal student loan borrowers
Navient has agreed to pay out $95 million to 350,000 people in the country who were affected by its delinquency practices. The company must cancel nearly $1.7 billion in private student loan balances and make restitution payments of $95 million to the federal student loan borrowers. The company’s delinquency practices impacted students from all generations, from high school students who were delinquent for the first seven months to mid-career borrowers who had dropped out of for-profit schools.
The settlement calls for Navient to notify borrowers of an opportunity to apply for a limited PSLF waiver. The PSLF waiver allows qualifying public service employees to have non-qualifying repayment periods count toward loan forgiveness. To apply for the limited PSLF waiver, borrowers must be working in a public service position and file employment certifications by October 31, 2022. Ohio borrowers will receive a lump-sum payment of approximately $260 per loan, with the rest going to other states and Washington D.C.
66,000 borrowers affected by settlement
More than 66,000 borrowers will receive money from Navient, the nation’s largest student loan company after it agrees to cancel the debt of more than $1.85 billion in private education loan balances. Navient is accused of steering borrowers away from repayment plans that were beneficial to their financial health. The company has agreed to compensate 66,000 borrowers with a $260 check. If you have a student loan, learn about the new settlement terms and get your balance repaid today!
Thousands of borrowers will receive money in the spring from the settlement. The lion’s share of the settlement money will be distributed as debt cancellations. While this settlement will help thousands of borrowers, it will largely benefit borrowers with private student loans. Many borrowers did not even know that a federal program aimed at helping low-income students get their debts forgiven. The lawsuit against Navient is not the only one that affected thousands of Americans, however.
States affected by settlement
The United States and the States affected by the student loan lawsuit settlement are coming to terms on the fate of defrauded students. In a 45-page document, the settlement details multiple provisions that will benefit borrowers. The lion’s share of the settlement will come as debt cancellation. But it will not cover private loans, which could lead to litigation against Navient. However, federal borrowers affected by the settlement may qualify for borrower defense to repayment (BDR) and cancel their debt.
The student loan lawsuit settlement was made possible through the agreement reached between Navient and the state attorney general. The settlement amounts to nearly $1.85 billion and will provide debt relief for over 400,000 loan holders. The settlement will not affect borrowers who made timely payments on their loans, but it will affect those who missed those payments. In the end, the settlement will be a win-win for both states. But the question remains: who will benefit from this settlement?
Victims of lawsuit
A 45-page lawsuit filed by victims of student loan fraud seeks to settle their claims against the Department of Education. The case was initially denied due to a lack of evidence. However, the case has since gained strength thanks to depositions conducted by student borrowers who testified about their experiences. More than 900 affidavits describe the harm caused by the Department of Education’s inaction. The case is expected to be decided in October.
Navient, formerly known as Sallie Mae, has reached a settlement with state leaders over its deceptive practices. The company steered students into a series of costly payment plans. Navient employees had misled students into forbearances, which increased their interest rates and extended the duration of their payments. However, the lawsuit argues that Navient’s practices were not only deceptive but also violated consumer protection laws.