Navient To Cancel $1.7 Billion In Private Student Loans, Pay $95 Million In Restitution To Borrowers
LOS ANGELES (CBSLA) — Student loan servicer Navient has agreed to settle allegations of misconduct by agreeing to cancel $1.7 billion in private student loans and paying $95 million in restitution for borrowers.
The California Attorney General's Office had sued Navient in 2018, alleging the company violated the state's Unfair Competition Law and False Advertising Law by steering vulnerable borrowers into forbearances and failing to advise them on the benefits of income-driven repayment programs. Many of the borrowers took out private student loans to attend "exploitative for-profit schools with low graduation and job-placement rates" all the way back to the early-to-mid-2000s, according to the Attorney General's Office.
"Navient has been one of the worst actors in the student loan servicing market, and this settlement is a step toward accountability, providing direct relief for many of our most vulnerable student borrowers," Attorney General Rob Bonta said in a statement.
The settlement requires Navient to make $95 million in restitution payments of about $260 each to approximately 357,000 borrowers, including 43,000 Californians. Navient also agreed to cancel more than $1.7 billion in subprime private student loans owed by approximately 66,000 borrowers nationwide. Approximately 7,400 California borrowers will receive about $261 million of that debt cancellation.
Moving forward, Navient will also have to make steps to prevent future misconduct, including making sure that call agents discuss the benefits of income-driven repayment with all borrowers who seek to lower or stop their payments; ensure call agents take time to give thorough and accurate information to borrowers; make changes to its payment-processing procedures that will benefit borrowers; limit or reduce certain fees for late payments or entering forbearances; and improve their billing statements and other communications so borrowers can be better informed of their rights and obligations.
Consumers who are eligible for a restitution payment will receive a postcard from the Attorney General's settlement administrator by this spring. Borrowers whose debt will be canceled will be notified by Navient. For more information, visit www.NavientAGSettlement.com.
