Student loan processor Navient is set to cancel nearly $2 billion in debt in an agreement with 39 state attorneys general.
Navient is one of the largest student loan processors in the U.S., and the settlement will cancel the debt of 66,000 borrowers bringing the total to $1.7 billion, according to WSJ.
As the New York Times reports, the deal also forces Navient to settle claims totaling $1.85 billion with 39 states to settle predatory student loan claims for borrowers who were said to be highly unlikely to be able to pay back the debt.
Josh Shapiro, attorney general for the state of Pennsylvania said, “Navient repeatedly and deliberately put profits ahead of its borrowers — it engaged in deceptive and abusive practices, targeted students who it knew would struggle to pay loans back, and placed an unfair burden on people trying to improve their lives through education.”
Navient did not admit fault in the settlement and maintained that the company did not act illegally. As the Wall Street Journal pointed out, the loans related to the settlement are private loans and are not guaranteed by the federal government.
Navient will be required to make a one-time payment of about $145 million to the states involved, as part of the settlement agreement.
Tennessee was among the states included in the settlement.
“Student loan servicing in many respects is just a mess. And predatory lending is worse,” said Tennessee Attorney General Herbert H. Slatery. “Navient’s practices harmed Tennesseans trying to improve their lives through an education. This Office will continue to work on their behalf to enforce consumer protection laws and stop deceptive and predatory student loan practices.”
In Tennessee specifically, $47,626,335 in debt relief was made eligible for 2,090 residents. About $2.9 million in restitution will be paid to 10,848 Tennesseans and $687,456 will be paid to the state.
The attorney general’s office said if you qualify for debt cancellation and/or relief, the only action you need to take is to update or create your studentaid.gov account to ensure the Department of Education has your current address.
Borrowers who will receive private loan debt cancellation will be given notice from Navient by July 1, 2022. The attorney general’s office said they will also receive refunds of any payments made on the canceled loans by that date.