Navient Will Cancel $1.7 Billion Worth of Student Loan Debt as Part of a Massive New Settlement
- How Refinancing Student Loans Saves Money
- You Can Sign up Now for Biden's New Student Loan Repayment Plan
- A Guide to Credit Scores and Student Loan Refinance
- Interest Rates on Federal Student Loans Will Rise Later This Year
- Over 600,000 Student Loan Borrowers Have Had Their Debt Forgiven Thanks to This Program
One of the country’s largest student loan servicers will cancel the debt of tens of thousands of borrowers in an agreement with dozens of state attorneys general.
Under the terms of a new settlement released Thursday, Navient will provide student loan relief worth a total of $1.85 billion. The vast majority of that money ($1.7 billion) will come in the form of balance cancellation for roughly 66,000 borrowers with private loans, many of whom borrowed from Sallie Mae in the early to mid-2000s to attend for-profit colleges with low graduation rates. Another $95 million will be distributed in the form of $260 cash payments to 350,000 federal borrowers that Navient placed in certain long-term forbearance programs.
The settlement is the culmination of a years-long series of lawsuits over allegations that Navient, before it spun off from Sallie Mae, originated predatory subprime loans. More recently, as a federal student loan servicer, Navient was accused of pushing student borrowers into expensive forbearance plans rather than educating them about more affordable options like income-driven repayment plans. The result, the attorneys general allege, was that struggling borrowers accrued mountains of unnecessary debt while Navient profited. Navient denies the allegations.
The company is one of the largest student loan servicers in the country, but announced this fall that it would discontinue its partnership with the Education Department.
How to know if you’re eligible for loan cancellation or relief payments
If you’re a private borrower eligible for relief under the terms of the settlement, there’s nothing you need to do. Navient will notify you by July 2022 if your loan debts will be canceled. The company will also refund any payments made on canceled loans after June 30, 2021.
If you’re a federal borrower, you should make sure your studentaid.gov account is updated with your current address. You’ll receive a postcard this spring if you’re eligible for the $260 payment.
For more information, you can visit www.NavientAGSettlement.com.
More from Money:
More Student Debt Upheaval: Navient to Stop Servicing Federal Student Loans
3 Tips to Lower Your Student Loan Debt This Year
Student Loan Scams Are on the Rise Amid Confusion Over Debt Relief. Here's What to Watch for