Student Loan Company reaches $1.85 billion settlement with Illinois and other states | Chicago News
Tens of thousands of borrowers in Illinois and across the country will have their student loan debt forgiven following a $1.85 billion settlement between multiple states and one of the biggest collection companies from the country.
Navient, the second-largest student loan servicer in the United States, agreed on Thursday to cancel $1.7 billion in debt owed by more than 66,000 borrowers across the country and pay another $140 million. sanctions in a multi-state lawsuit accusing it of abusive lending practices.
“Today’s settlement will hold Navient accountable for its predatory and deceptive actions and will hopefully serve as a model of reform in an industry that desperately needs it,” said Illinois Attorney General Kwame Raoul. , one of 39 attorneys general who filed the complaint. ..
The claims against Navient date back to 2009. According to the lawsuit, Navient again repeatedly indebted struggling student borrowers by steering them into costly long-term forbearances.
These forbearances allow borrowers to suspend or reduce payments while they rebuild their finances, but interest on the loan continues to accrue and may ultimately result in an increase in the amount paid over the life of the loan.
In addition to the debt it will cancel, Navient will make restitution of about $260 to each of the approximately 350,000 harmed consumers nationwide, for a total of $95 million, Raoul’s office said.
In Illinois alone, about 18,470 borrowers will receive nearly $5 million in restitution payments, while 5,217 borrowers will see more than $133 million in debt forgiveness and the state itself will receive a $7 direct payment. .2 million.
“Borrowers who will receive restitution or forgiveness span all generations: Navient’s harmful conduct has affected everyone, from students who enrolled in colleges and universities immediately after high school to mid-career students who dropped out after enrolling in a for-profit school in the early 2000s,” Raoul’s office said in a statement.
Navient has denied acting illegally and the company has not admitted any wrongdoing in the settlement, which is subject to court approval.
Despite the settlement, Navient maintains that the lawsuit against him was based on “unsubstantiated claims” and that the settlement was only agreed to “to avoid the additional burden, expense, time and distraction that would prevail before the court”.
“Navient is and has always been focused on helping student borrowers understand and select the right payment options to meet their needs,” Navient chief legal officer Mark Heleen said in a statement Thursday. “In fact, we’ve increased enrollment in income-contingent repayment plans and reduced default rates, and each year hundreds of thousands of borrowers we support successfully repay their student loans.”
Borrowers whose loans are canceled will receive notice from Navient along with a refund of any payments made after mid-2021. Additional information can be found at www.NavientAGSettlement.com.
The Associated Press contributed to this report.
Contact Matt Masterson: @ByMattMasterson | [email protected] | (773) 509-5431