Photo illustration by Getty Images
More than 400 Minnesotans who got student loans through Navient will see their debt canceled, and 4,325 will receive restitution payments from the company under a settlement reached Thursday with 39 states, the Minnesota Attorney General’s Office announced.
The coalition of attorneys general accused Navient, one of the nation’s largest student loan servicers, of steering borrowers into costly forbearances instead of flexible, income-based repayment plans.
Navient also allegedly made subprime private loans available to students at for-profit schools and colleges with low graduation rates — knowing many would likely default — to entice schools to use company for other, more profitable loans, according to the attorneys general.
“Navient put their own profits ahead of the interests of millions of families across our country who are struggling to repay student loans,” said Minnesota Attorney General Keith Ellison in a news release.
The $1.85 billion settlement requires Navient to cancel debts on subprime private student loans owed by approximately 66,000 people nationwide. The company will pay $95 million restitution to 350,000 borrowers affected by the forbearance steering practices — about $260 per borrower.
The deal also requires Navient to inform borrowers of income-driven repayment plan options before placing borrowers in optional forbearance.
Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.