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Navient Settlement: Student loan forgiveness expected for over 66,000 borrowers |  What to know, who is eligible

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Navient Settlement: Student loan forgiveness expected for over 66,000 borrowers | What to know, who is eligible

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HARRISBURG, Pa .– Tens of thousands of people who have taken out student loans over the past 20 years could have their loans canceled or receive a small check in a nationwide settlement with Navient, a major student loan collection company, following allegations of abusive lending practices.

Settlement proposals were filed in courts across the country on Thursday.

The deal, if approved by a judge, cancels $ 1.7 billion in private debt owed by more than 66,000 borrowers across the United States and distributes a total of $ 95 million in repayments of approximately $ 260 each to about 350,000 federal borrowers.

The proposed settlements have been filed in the courts of each participating state and will require court approval.

Navient said he had not acted illegally and admitted no fault in the regulations.

Here’s a rundown of the details and who’s supposed to benefit:

Who does it affect?

Borrowers who will receive restitution or debt cancellation span all generations, officials say. They include students who went to colleges or universities right after high school and mid-career students who dropped out after enrolling.

The loans were taken out mainly between 2002 and 2014, officials said. Private loans often had a variable rather than a fixed interest rate and a shorter window than federal student loans to make payments before defaulting.

Many borrowers who were struggling to make their payments were not told of a federal “income driven” program that could reduce their payments. Others have not been informed of a federal program that cancels certain debts of public sector workers.

How will you know if you benefit from it?

Borrowers who see their private loan debt canceled will be notified by Navient by July 2022, along with a refund of payments they made on the loan after June 30, 2021, state officials say. Private loan borrowers do not need to take any action to qualify.

Borrowers eligible for about $ 260 in restitution will receive a postcard from the facility administrator this spring, state officials say. The checks are expected to come out in mid-2022.

Eligible federal loan borrowers should update or create a account to ensure that the US Department of Education has their current address.

More details are here.

Who is eligible for restitution?

State officials say there are various situations that make borrowers eligible.

For example, they must have lived in a state participating in the settlement in January 2017 and have spent at least two years in abstention.

Forbearance is when lenders allow borrowers to suspend or reduce payments for a limited time while they improve their finances. However, the interest on the loan continues to accumulate and can ultimately increase the amount paid over the life of the loan.

Who is eligible for debt cancellation?

Borrowers who will primarily see their debt written off took out subprime private student loans through Sallie Mae between 2002 and 2014 and then had more than seven consecutive months of past due payments, state officials say.

For example, in Massachusetts and Pennsylvania, the average forgiven debt is around $ 27,000, officials say. In Washington state, it’s about $ 25,000.

What are some examples?

Originally from Philadelphia, Alexis Miller was the first in her family to attend college and needed financial help to attend. She chose the nursing program at Drexel University and in 2006 took out a loan through Navient. The total cost of the nursing school loans was around $ 60,000, and then interest and penalties – some of which she was not told – brought the total score up to $ 81,000 or $ 82,000, Miller said.

“To say this business has tormented me is an understatement,” Miller said.

The company harassed her, her employers and her family members with phone calls, gave her misleading information about assistance programs, and urged her to abstain “I knew it was not really the right choice, ”she said.

“I did my best to make ends meet, with my own financial issues and there just wasn’t a solution, they were never really willing to work with me,” Miller said.

In the end, it destroyed her credit, she said.

The Pennsylvania lawsuit in 2017 included other examples.

A student who enrolled in a master’s program did not graduate and struggled to repay the loan, he said.

Despite the demonstration of these financial difficulties in Navient, the company did not enroll the student in an “income-driven plan” to reduce payments until 2015, six years after being cleared for the first time in under federal law in 2009. Almost $ 27,000 in interest was added to his loans after 2004, the lawsuit said.

In another example, a public sector employee qualified for a federal debt cancellation program, but Navient nonetheless gave her false information that dissuaded her from enrolling.

Seven years later – in 2014 – she learned she was indeed eligible, meaning she had made seven years of payments that didn’t count towards the total because she didn’t register in 2007, according to the trial.

Copyright © 2022 by The Associated Press. All rights reserved.

Navient Settlement: Student loan forgiveness expected for over 66,000 borrowers | What to know, who is eligible

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