WEIS-Radio | Local and regional news, sports and weather » Navient agrees to $1.7 billion student loan settlement

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(NEW YORK) — Navient, one of the nation’s largest student loan services, agreed Thursday to pay nearly $2 billion to settle claims by 38 states and the District of Columbia it deceived thousands of borrowing in costly, long-term forbearance plans that caused students to pay more than they should have.

“They set up a multi-billion dollar scam,” Pennsylvania Attorney General Josh Shapiro said at a press conference announcing the settlement agreement.

Navient, formerly known as Sally Mae, burdened struggling students with debt, attorneys general said, pushing them into risky private loans they knew most would be unable to repay.

“So many people are trapped in unaffordable student loan debt,” Massachusetts Attorney General Maura Healey said. “These loans were doomed from the start and Navient knew it.”

Navient also pushed students to abstain instead of advising them on a more affordable repayment plan.

“What Navient did was deceive them,” Washington Attorney General Bob Ferguson said. “All they got was a push into a bad plan, this forbearance plan.”

When students stopped making payments, as forbearance permits, the debt accumulated. The agreement cancels nearly $1.7 billion in balances owed by 66,000 borrowers nationwide.

Borrowers with private loan debt forgiveness will receive notice from Navient, along with reimbursement of any payments made on private loans canceled after June 30, 2021. Federal borrowers eligible for a restitution payment of approximately $260 $ will receive a postcard in the mail from the Settlement Administrator later this spring.

Navient denied any violation of the law. “The company’s decision to resolve these matters, which were based on unsubstantiated claims, allows us to avoid the additional burden, expense, time and distraction that prevails in court,” said the General Counsel. of Navient, Mark Heleen, in a statement.

The settlement includes the states of Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, Carolina North, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, Washington, West Virginia, Wisconsin and District of Columbia.

“Today’s billion dollar deal will provide relief to thousands of borrowers in New York and across the country and help them get back on their feet. Navient will no longer be able to line its pockets at the expense of students trying to earn a college degree,” New York Attorney General Letitia James said in a statement Thursday.

“Americans across the country are struggling with their student loan debt,” Illinois Attorney General Kwame Raoul said, adding that Navient was “putting students in debt” with private loans they could never repay. . “Today’s settlement provides substantial student loan relief.”

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