State attorneys from 38 states and the District of Columbia have reached a settlement to resolve their lawsuit against Navient, one of the country’s largest student loan servicers. More than 60,000 borrowers will have their student debt cancelled thanks to the deal, and hundreds of thousands more will receive restitution payments.
Why was Navient being sued?
The lawsuit alleged that Navient encouraged borrowers to enter forbearance, which is simpler for servicers to manage but leads to borrowers paying more in interest over time, rather than borrower-centric income-driven repayment plans.
It also accused Navient of issuing subprime private loans to borrowers enrolled at for-profit schools, despite the company’s own estimations that up to 90 percent of recipients were likely to default.
The settlement agreement stipulates that Navient doesn’t admit any liability or wrongdoing, and the company has said that they agreed to the deal to avoid prolonging the already years-long lawsuit.
Which borrowers will receive debt cancellation or restitution?
Under the terms of the settlement, Navient has agreed to cancel student debt for about 66,000 private student loan borrowers who live in one of the states that participated in the lawsuit and whose loans:
- Were disbursed between 2002 and 2014
- Are currently delinquent
- Funded attendance at select for-profit schools (including the now-defunct ITT Technical Institute), or funded attendance at a non-profit school if the borrower’s credit score was less than 640 when Navient approved their loan application
The settlement also calls for Navient to pay a total of $95 million in restitution to approximately 350,000 federal student loan borrowers — about $260 per borrower — who live in a participating state and whose loans were placed in certain forbearance programs.
I qualify for student debt cancellation or restitution payments under the settlement with Navient. What are the next steps?
Navient will contact eligible borrowers by July 2022 to let them know that their loans are being cancelled; borrowers who are eligible for a restitution payment will receive a postcard with more information this spring.
How can I get my student debt cancelled if I don’t qualify under the Navient settlement?
While the settlement with Navient stands to cancel 66,000 borrowers’ student debt, it only scratches the surface of the 47.9 million total Americans with student debt.
If you don’t qualify for student debt cancellation under the Navient settlement and you have federal student loans, there are other ways to have your student debt forgiven:
- Public Service Loan Forgiveness (PSLF), which forgives public sector employees’ remaining debt after ten years of repayment. Better yet, a limited-time waiver makes it easier to qualify for PSLF.
- Check your eligibility for PSLF in minutes with our Reassess tool
- Income-Driven Repayment (IDR) plans, which forgive remaining debt after 20-30 years of repayment and can lower your monthly payments in the meantime
- Check your eligibility for IDR plans in minutes with our Reassess tool
- Other special provisions for borrowers who have a permanent disabilities, whose schools closed while they were enrolled or right after they graduated, or who were defrauded by their schools