Navient will provide debt relief to more than 400,000 student loan borrowers after the company agreed to a $1.85 billion settlement with a number of state attorneys general.
Although the settlement is not the result of class action litigation (more on this below) over Navient’s unfair handling and predatory issuance of student loans, it amounts to sufficient relief for hundreds of thousands of borrowers across 38 states and Washington D.C. who were allegedly scammed by the company.
“Navient knew that people relied on their loans to make a better life for themselves and for their children and instead of helping them, they ran a multibillion dollar scam,” Pennsylvania Attorney General Josh Shapiro said at a January 13 press conference.
Who’s covered and what will they get?
Through the settlement, roughly 350,000 federal student loan borrowers who were placed into certain long-term forbearance programs by Navient will receive around $260 each, amounting to $95 million in compensation.
As part of the deal, Navient is also obligated to cancel the remaining balances on private loans taken out by approximately 66,000 students, totaling $1.7 billion, between 2002 and 2014.
The loan cancellations mostly affect those who attended for-profit schools, such as DeVry University, ITT Technical Institute and Kaplan University. A full list of the covered for-profit schools can be found at the settlement website in a chart under question six.
Importantly, loans eligible for cancellation must have been past due for more than seven consecutive months prior to June 30, 2021.
More detailed information on who’s covered can be found under questions four and six in the official settlement website’s FAQs section.
How do I get my Navient settlement money?
If you’re covered by the Navient settlement, you do not need to take any action.
Those eligible for a settlement payment should receive a postcard in the mail sometime this spring, with checks hoping to be sent out in mid-2022.
Consumers who are eligible for loan cancellation should receive a letter from Navient regarding the discharge of their debt by July 2022.
Importantly, student loan borrowers who are covered by this settlement must ensure that their address is up to date in order to receive compensation.
According to the official settlement website, federal loan borrowers who might be eligible for payment should update their contact information in their StudentAid.gov account, or create an account if they do not already have one.
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Which states are covered?
The states covered by the $95 million restitution portion of the settlement, which also includes Washington D.C., are:
Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Iowa, Illinois, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Maine, Minnesota, Missouri, North Carolina, Nebraska, New Jersey, New Mexico, Nevada, New York, Ohio, Oregon, Pennsylvania, Tennessee, Virginia, Washington and Wisconsin.
The states covered by the debt cancellation part of the settlement include all of the above plus:
Arkansas, Kansas, Michigan, Rhode Island, South Carolina, Vermont and West Virginia.
Where can I get more information on the settlement?
The official multi-state Navient student loan settlement website can be found here:
Be sure to check back with the website from time to time, as it will be updated with more information.
What was the litigation about?
The litigation, spearheaded by the attorneys general from Pennsylvania, Washington, Illinois, Massachusetts and California, claimed Navient pushed federal student loan borrowers into long-term forbearance rather than toward enrollment in low-cost, income-based repayment plans. The states also alleged Navient issued private student loans to those attending for-profit schools and colleges with low graduation rates despite knowing that a high number of borrowers would be unable to repay their obligations.
What’s the difference between lawsuits filed by states and regular class action cases?
On the outside, litigation filed against a company by state attorneys general looks markedly similar to the kinds of consumer class action lawsuits we’re most familiar with. In a lawsuit filed by a state attorney general, the state is essentially stepping in on behalf of its residents who’ve been affected by a company’s alleged conduct.
In this instance, the attorneys general from 38 states and the District of Columbia sued Navient to help out certain student loan borrowers. Although the allegations against Navient were not presented as a massive class action in which private law firms were at the helm, the resulting settlement is nevertheless similar to one that might come in a traditional consumer class action case. Ultimately, consumers allegedly wronged by a company will receive some compensation, and that’s what matters.
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