The Navient student loan repayment settlement has been a significant development in the student loan industry, providing relief to thousands of borrowers who were affected by the company's allegedly deceptive lending practices. Navient, one of the largest student loan servicers in the United States, has been accused of steering borrowers towards more expensive repayment plans, rather than helping them enroll in income-driven repayment plans that could have lowered their monthly payments.
Background of the Navient Settlement
In January 2022, Navient announced that it had reached a settlement with 39 states to resolve allegations of unfair and deceptive student loan servicing practices. The settlement, which was valued at approximately 1.85 billion, required Navient to cancel 1.7 billion in private student loans and pay $95 million in restitution to affected borrowers. The settlement also required Navient to reform its lending practices and provide more transparency to borrowers about their repayment options.
Key Terms of the Settlement
The Navient settlement includes several key terms that are designed to provide relief to affected borrowers. These terms include:
- Cancellation of 1.7 billion in private student loans: Navient agreed to cancel 1.7 billion in private student loans that were held by approximately 66,000 borrowers. These loans were primarily Subprime loans that were originated between 2002 and 2010.
- Restitution payments: Navient agreed to pay 95 million in restitution to approximately 350,000 borrowers who were affected by the company's allegedly deceptive lending practices. Borrowers who are eligible for restitution will receive a payment of approximately 260.
- Reforms to lending practices: Navient agreed to reform its lending practices to provide more transparency to borrowers about their repayment options. The company must also provide more training to its customer service representatives to ensure that they are providing accurate and helpful information to borrowers.
| Category | Description |
|---|---|
| Number of borrowers affected | Approximately 416,000 borrowers |
| Amount of private student loans cancelled | $1.7 billion |
| Restitution payment amount | $95 million |
| Number of borrowers eligible for restitution | Approximately 350,000 borrowers |
Impact of the Settlement on Borrowers
The Navient settlement is expected to have a significant impact on borrowers who were affected by the company’s allegedly deceptive lending practices. Borrowers who are eligible for loan cancellation will no longer be required to make payments on their private student loans, which could provide significant relief and help them to improve their financial stability. Borrowers who are eligible for restitution will receive a payment that could help them to pay off other debts or cover living expenses.
Next Steps for Borrowers
Borrowers who are affected by the Navient settlement should take several steps to ensure that they receive the relief they are eligible for. These steps include:
- Verify eligibility: Borrowers should verify that they are eligible for loan cancellation or restitution by contacting Navient or their state’s attorney general’s office.
- Review loan documents: Borrowers should review their loan documents to ensure that they understand the terms of their loans and how the settlement may affect them.
- Seek professional advice: Borrowers who are unsure about how to proceed should seek professional advice from a financial advisor or attorney.
Who is eligible for the Navient settlement?
+Borrowers who are eligible for the Navient settlement include those who have private student loans that were originated by Navient between 2002 and 2010, and who were affected by the company’s allegedly deceptive lending practices.
How much will I receive in restitution?
+Borrowers who are eligible for restitution will receive a payment of approximately $260. The exact amount of the payment will depend on the number of borrowers who are eligible for restitution and the total amount of funds available.
Do I need to take any action to receive the settlement benefits?
+No, borrowers do not need to take any action to receive the settlement benefits. Navient will notify borrowers who are eligible for loan cancellation or restitution and will provide them with instructions on how to proceed.
