The US student loan provider, Navient, has reached an agreement with 39 states to pay 1.85 billion. USD to resolve unwanted loan requirements.
Navient Corp. reached an agreement with 39 states to pay $ 1.85 billion and cancel nearly 70,000 student loans to resolve allegations that the company used lending practices.
Most of the settlement value comes from the cancellation of $ 1.7 billion in loans taken out since 2002, according to statements from the company and state attorneys. State officials said Navient promised to help distressed borrowers find affordable repayment plans, but instead steered them into expensive long-term repayments.
“The bottom line is this: Navient knew people were relying on their loans to create a better life for themselves and their children,” Pennsylvania Attorney General Josh Shapiro said Thursday at a news conference. “Instead of helping them, they ran a multi-million dollar scam.”
The study by Navient States and the U.S. Consumer Financial Protection Bureau had previously been reported, and so had statements at conciliation negotiations. A Bloomberg Intelligence analysis in December estimated the company’s financial exposure at more than $ 500 million. Shares tumbled on the news, but changed slightly during midday trading on Thursday.
Navient, based in Wilmington, Delaware, manages about a quarter of the country’s student loans. It was created in 2014 in a spinoff by US-backed loan generator Sallie Mae.
Lending service providers, like mortgage lenders, play an important role in the student debt system, which consists of government-issued loans and loans from private lenders. As a service employee, Navient sends borrowers their monthly bills, collects payments and advises them on their repayment options.
The settlement says the company steered struggling student loan borrowers into “expensive long-term indulgences instead of advising them on the benefits of more affordable income-driven repayment plans.”
When borrowers are in forgivability, their payments are pushed out as interest rates accrue. Payments for income-driven repayment plans for government loans are based on what a borrower earns and can in some cases be zero dollars. Their balances can be forgiven after a certain number of years – 20 or 25 years – or 10 years in the case of the Public Service Loan Forgiveness program.
“As it stands right now, nearly 45 million Americans owe more than $ 1.8 trillion in debt,” Shapiro said. “By the way, I am one of them. I still pay off my student debt. ”
State attorneys said borrowers eligible for repayment will automatically receive them by mail.
(Updates based on Navient)