Missouri Attorney General Obtains $53 Million Settlement From Navient Student Loan Service

Missouri Attorney General Eric Schmitt announced that Navient, one of the nation’s largest student loan servicers, has reached a civil settlement with his office and 38 other states over abuse stemming from predatory student loans. The agreement resulted in a $53 million settlement for the people of Missouri: $2.5 million in restitution and $51 million in debt forgiveness from a private loan.

“In this case, my office obtained more than $53 million in debt relief and restitution to resolve allegations of widespread unfair and deceptive student loan servicing,” Attorney General Schmitt said. “Taking advantage of students who need help funding their education is illegal and can harm the future of so many people. This settlement is a great outcome for Missouri students and for the state as a whole.

This settlement resolves claims that since 2009, after saying it would help borrowers find the best repayment options for them, Navient has steered struggling student borrowers into costly long-term forbearances instead of advising them on the benefits of more affordable, income-driven repayment plans. . According to the Attorney General, interest accrued due to Navient’s management practices was added to borrowers’ loan balances, pushing borrowers further into debt.

Navient also allegedly created predatory private loans at risk to students attending for-profit schools and colleges with low graduation rates, even though it knew a very high percentage of those borrowers would be unable to repay the loans.

Going forward, Navient should explain the benefits of income-based repayment plans, as well as offer to estimate income-based payment amounts before placing borrowers in optional forbearances. Navient also needs to train specialists who will advise struggling borrowers on alternative repayment options. In addition, the settlement requires Navient to notify borrowers of the U.S. Department of Education’s new PSLF opportunity, which temporarily offers millions of skilled government workers the opportunity to have their previously ineligible repayment periods taken into account. account for loan cancellation.

Following the settlement, borrowers benefiting from private loan debt cancellation will receive notice from Navient, along with reimbursement of any payments made on private loans canceled after June 30, 2021. Federal borrowers who are eligible for a restitution payment of approximately $260 will receive a postcard in the mail from the settlement administrator later this spring.

States joining Missouri in the lawsuit include Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania , Rhode Island, South Carolina, Tennessee, Virginia, Vermont, Washington, West Virginia and Wisconsin.

The petition can be found here.

The signed settlement agreement can be found here.

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