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Navient, a major student loan collecting company, agreed to cancel $1.7 billion in debt owed by more than 66,000 borrowers across the United States and pay over $140 million in other penalties to settle allegations of abusive lending practices.
The settlement with 39 state attorneys general was announced Thursday. Indiana was among the states in the settlement.
Navient is headquartered in Wilmington, Delaware, but has major operations in Fishers. About 1,400 people work in the company’s 450,000-square-foot loan servicing and data center east of Interstate 69 and north of 106th Street. The center services federal education loans and consumer loans.
Navient “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,” Pennsylvania Attorney General Josh Shapiro, who helped lead the negotiations, said in a statement.
Among other things, he said, Navient misled borrowers who were having trouble making payments into entering what are known as long-term forbearances, which caused them to run up even more debt.
Forbearance is when lenders allow borrowers to pause or reduce payments for a limited time while they build back their finances. However, interest on the loan continues to accrue and can ultimately cause the amount paid over the life of the loan to be higher.
Navient denied acting illegally, and it did not admit to any wrongdoing under the settlement, which is subject to court approval.
“Navient is and has been continually focused on helping student loan borrowers understand and select the right payment options to fit their needs,” Chief Legal Officer Mark Heleen said in a statement.
In addition to forgiving tens of thousands of loans, Navient will pay $142.5 million, most of which will go to about 350,000 borrowers who were placed in long-term forbearances.
Also, Navient will be required to do more to advise borrowers of their options and explain repayment plans to them.
Massachusetts Attorney General Maura Healey called the settlement “an important step toward addressing our broken student loan repayment system.”
Among those who will benefit is Ashley Hardin, 38, of Seattle. Hardin defaulted on about $108,000 in private student debt in 2020 after scrambling for more than a decade to try to pay off a loan she used to attend the Brooks Institute of Photography in California.
Her monthly payments were often more than her rent. For a time, Navient agreed to lower her payments to about $650 per month, but when that period ended, she owed over $1,000 again, having to pay compound interest.
“It’s a massive weight lifted,” said Hardin, who was unable to make a career of photography in Seattle and now runs a food truck with her husband. “I can breathe again and feel like I’m not drowning, like I’m not going to get a call tomorrow that they’re suing me for defaulting.”
Borrowers whose loans are canceled will receive notice from Navient along with refunds of any payments made after mid-2021.
The settlement also includes Arizona, Arkansas, California, Colorado, Connecticut, the District of Columbia, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, Washington, West Virginia and Wisconsin.
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Just a quick question and/or comment about loans, debt, interest, etc. in general. When were you taught the basics in understanding what it means when you sign a promissory note? How did you learn? Are these things being taught in schools (high school, college) today? If so then great, but why do so few understand the basics of taking on debt? Seems to me that much more effort and education is needed at the high school level on the basics of finance so that students can understand the fundamentals of taking out any kind of loan (student loan, car loan, credit card debt, signing a lease, etc.). As today’s youth go out into the world, it seems that knowledge which converts to wisdom which converts to power would help to reduce the predatory actions of these student loan and credit card companies. By the way, my opinion only but credit card companies should NOT be allowed to lure students with hats, tee shirts, in exchange for a free credit card. This practice only encourages the naive to take on debt that they are in no position to handle. This should not be allowed by college and university Presidents. If it is that easy for Navient to write off more than $1.7B and pay $170M in fines…then maybe, the above knowledge I spoke of above could be used to reduce student loan debt, not to mention used in negotiating, at the very least, the terms of the note!! Thoughts?!
Could be taught in schools, yes. Could also be taught at home.
Navient is a spin-off from Sallie Mae which tried to con CIty officials out of a $3 million tax abatement in 2017, and the officials were all-in. Despite all the orchestrated behind-the-scenes oil and grease, the plan, when disclosed, could not stand up to public scrutiny and was quietly withdrawn. Hoosiers should be grateful for our Access to Public Records Act which obligates agencies to disclose public records. Corporate predation never sleeps.
“…Navient will pay $142.5 million, most of which will go to about 350,000 borrowers who were placed in long-term forbearances…” which comes out to be about $407.14/victim.
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And there were no penalties placed upon the suits running the company like loan sharks. Perhaps if the executives were ordered to repay any bonuses (with interest) they received while all of this was going on, they would understand the pain they were causing their victims. Oh, and leaving the company [now] wouldn’t absolve them of their repayment responsibilities.