Attorney General Dana Nessel announced Thursday that more than 1,500 student borrowers in Great Lakes State will benefit from a settlement between student loan provider Navient and nearly 40 states, including Michigan.
Delaware-based Navient is one of the nation’s largest companies servicing and charging student loans. It faced lawsuits brought by several state attorneys over allegations that it participated in unfair and bizarre practices while lending to students.
Navient has denied violating any laws, but settled Thursday for $ 1.85 billion and a deal to change its business practices.
“The predators that Navient used exploited students who wanted nothing more than an education,” Nessel said in a statement. “The company placed borrowers in risky subprime loans, prompting them to take on debts they could never repay. This settlement reflects the responsibility of affected borrowers across the country.”
Nessel’s office noted that it is still reviewing the full scope of relief that the settlement will have on Michigan borrowers and will provide an update when determined.
Michigan joins 37 other states and the District of Columbia to take advantage of the settlement. The trial was led by state attorneys from Pennsylvania, Washington, Illinois, Massachusetts and California.
The settlement should give more than 400,000 borrowers of student loans some debt relief. About 350,000 federal borrowers of student loans who had been put into long-term indulgence by Navient will receive about $ 260 each for a total repayment of $ 95 million.
The company had reportedly steered borrowers into indulgence, causing some to fall deeper into debt instead of leading them towards cheap repayment programs. Other allegations include allegations that Navient provided private loans to students with low graduation rates despite knowing that many would not be able to repay.
The settlement will also require Navient to cancel the remaining $ 1.7 billion balance of subprime private student loan balances owed by more than 66,000 borrowers across the country, including 1,576 in Michigan.
The company also calls for reforms of business practices, including training specialists to properly advise distressed borrowers.
Qualifying borrowers will automatically receive notification from Navient later this year.
Originally published January 18, 2022 on Michigan Advance. It is shared here with permission.
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