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Navient, one of the largest private student loan providers in the United States, has struck a $1.85 billion deal with dozens of states accusing the company of ‘deceptively entrapping’ thousands of borrowers with costly repayment plans.
The settlement hits one of the best-known student loan providers in the United States, which authorities had accused of predatory behavior as scrutiny intensifies over a precariously accelerating buildup of student debt.
Under the agreement with 39 U.S. states, $1.7 billion in private student loan debt owed by nearly 66,000 customers will be forgiven, and Navient will pay $95 million in restitution to students across the country.
“For too long, Navient has contributed to the national student debt crisis by deceptively trapping thousands of students in more debt,” New York Attorney General Letitia James said in a statement. “Navient will no longer be able to line their pockets at the expense of students trying to obtain a university degree.”
The states investigation found that beginning in 2009, Navient pushed students struggling to repay their loans into costly, long-term forfeitures rather than advising them on alternative repayment plans, which increased client debt, according to the New York Attorney General’s Office. .
Authorities said the company “also provided predatory, subprime and private loans” to students attending for-profit schools and substandard institutions, knowing that many of those borrowers would be unable to repay their loans.
“The company’s decision to resolve these issues, which were based on unsubstantiated claims, allows us to avoid the additional burden, expense, time and distraction that prevails in court,” said Mark Heleen, chief legal officer of Navient. The loan provider helped borrowers choose “the right payment options to meet their needs,” he said. Navient has denied any wrongdoing.
Learn more about Navient’s policy here.