RALEIGH, N.C. (WGHP) — In a big win for North Carolina student loan borrowers, Navient has been ordered to pay out millions in restitution after the loan servicer was accused of widespread unfair, deceptive and predatory lending practices, according to the office of North Carolina Attorney General Josh Stein.
On Thursday, Stein announced that Navient will pay $3,259,086 to more than 12,000 federal loan borrowers in North Carolina, and 1,267 borrowers will get a total of $33,252,530 in private loan cancellation.
This comes as part of a $1.85 billion settlement involving multiple statements.
“More than 13,000 North Carolinians will get student loan relief and a fresh financial start as a result of our settlement today,” said Stein in a news release. “These people borrowed money so they could get the education they needed to build successful lives, but Navient pushed them toward harmful financial decisions and predatory loans. I’m pleased we’re holding Navient accountable, and I’ll continue to do everything I can to protect student borrowers.”
What will Navient have to do?
Pending court approval, Navient will be required to:
- Cancel the remaining balance on nearly $1.7 billion in subprime private student loan balances owed by nearly 66,000 borrowers nationwide.
- Pay an additional $142.5 million to the attorneys general.
- Explain the benefits of income-driven repayment plans and offer to estimate income-driven payment amounts before placing borrowers into optional forbearances moving forward.
- Train specialists who will advise distressed borrowers concerning alternative repayment options and counsel public service workers concerning Public Service Loan Forgiveness (PSLF) and related programs
- Be prohibited from compensating customer service agents in a way that incentives them to minimize the time they spend counseling borrowers.
Navient will also need to notify borrowers about the U.S. Department of Education’s PSLF limited waiver opportunity. Through this program, qualifying public service workers can have repayment periods that previously did not qualify counted toward loan forgiveness if they consolidate into the Direct Loan Program and file employment certifications by Oct. 31, 2022.
I have loans through Navient. What do I have to do?
Federal loan borrowers who qualify don’t need to do anything. You may wish to update or create a studentaid.gov account to make sure that the U.S. Department of Education has your current address. For more information, visit www.NavientAGSettlement.com.
Navient will send a notice to borrowers who will have their private loan debts canceled by July 2022. This notice will include refunds for any payments made on the canceled private loans after June 30, 2021. Federal loan borrowers who are eligible for a restitution payment of about $260 will receive a postcard in the mail from the settlement administrator later this spring.
What is Navient accused of?
The attorneys general say that Navient pushed borrowers into forbearance instead of helping them into affordable income-driven repayment plans with payments as low as $0 a month or loan forgiveness.
Because of this, borrowers built up more interest on their loan balances.
Navient is also accused of offering predatory subprime private loans to students at for-profit schools and colleges with low graduation rates, even though it allegedly knew that a very high percentage of these borrowers wouldn’t be able to repay the loans.