Kris Tripplaar / Sipa United States via Reuters
Loan services giant Navient has agreed to write off $ 1.7 billion in student loan debt owed by about 66,000 borrowers in a settlement the company reached Thursday with 39 state attorneys general.
The settlement ends a multi-year legal battle in which Navient has faced two serious allegations. First, the company had pushed student borrowers into expensive abstentions instead of more flexible, income-based repayment plans.
A 2019 audit by the Office of the Inspector General of the United States Department of Education corroborated this claim, finding Navient telephone advisers repeatedly recommending forbearance to borrowers without mentioning other more repayment options. flexible.
As part of the settlement, Navient agreed to pay the states $ 95 million to offer the affected borrowers a repayment – about $ 260 each to 350,000 borrowers.
The company has also faced allegations that its predecessor, Sallie Mae, provided subprime private loans to vulnerable borrowers whom it knew were likely to default.
States alleged that these private loans were made in cooperation with certain for-profit colleges, many of which have incredibly low graduation rates, in order to induce these schools to rely on the company for other loans as well. students.
For those affected students, Navient agreed to write off $ 1.7 billion in current debt.
“Navient has repeatedly and deliberately put profits ahead of its borrowers,” said Pennsylvania State Attorney General Josh Shapiro, one of the leading voices behind the legal struggle.
In a statement, however, Navient made it clear that this settlement should not be viewed as an admission of guilt.
“The company’s decision to resolve these issues, which were based on unfounded claims, allows us to avoid the additional burden, expense, time and distraction that must prevail in the courts,” said General Counsel at Navient, Mark Heleen, in a statement.