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Student Loans Manager Navient Settles $ 1.85 Billion Deceptive and Abusive Practices Claims, Responds Attorney General Josh Shapiro

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Student Loans Manager Navient Settles $ 1.85 Billion Deceptive and Abusive Practices Claims, Responds Attorney General Josh Shapiro

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BOSTON – Navient, a leading student loan collection company, has agreed to write off $ 1.7 billion in debt owed by more than 66,000 borrowers in the United States and pay more than $ 140 million more penalties for resolving allegations of abusive lending practices.

The $ 1.85 billion deal with 39 state attorneys general was announced Thursday.

Navient “engaged in deceptive and abusive practices, targeted students he knew would have difficulty repaying their loans, and placed an unfair burden on those trying to improve their lives through education.” Pennsylvania Attorney General Josh Shapiro, who helped lead the negotiations, said in a report.

Among other things, he said, Navient misled borrowers who were struggling to make their payments by entering what are known as long-term forbearances, which forced them into further debt. more.

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

Navient has denied acting illegally and has not admitted any wrongdoing under the settlement, which is subject to court approval.

“Navient is and has continually focused on helping student loan borrowers understand and select the right payment options to meet their needs,” General Counsel Mark Heleen said in a statement.

In addition to canceling tens of thousands of loans, Navient will pay out $ 142.5 million, most of which will go to around 350,000 borrowers who have been placed on long-term forbearance.

Additionally, Navient will need to do more to educate borrowers about their options and explain repayment plans to them.

Massachusetts Attorney General Maura Healey called the settlement “an important step towards resolving our broken student loan repayment system.”

Among those who will benefit is Ashley Hardin, 38, of Seattle. Hardin defaulted on around $ 108,000 in private student debt in 2020 after scrambling for more than a decade to try to repay a loan she used to attend Brooks Institute of Photography in California.

Her monthly payments often exceeded her rent. For a while, Navient agreed to reduce her payments to around $ 650 per month, but at the end of that period, she again owed over $ 1,000, having to pay compound interest.

“It’s a huge lifted weight,” said Hardin, who couldn’t make a career in photography in Seattle and now runs a food truck with her husband. “I can breathe again and feel like I’m not drowning, like I’m not going to get a call tomorrow telling me they are suing me for default.”

Helena Moon, 34, was accepted into her “dream college” – Howard University – at the age of 18. When financial aid and scholarships weren’t enough, she sought out private loans and found herself bombarded with phone calls and letters from lenders after graduating. . Moon, who lives in Washington DC, said the experience was also stressful for his mother, who co-signed the loans.

“It’s a step forward towards racial equality when you think about the percentage of African Americans in debt in this country,” she said of the settlement.

Kelly Feeherry, 34, of Franklin, Mass., Described her experience using loans to attend art school as a “living nightmare” that threatened to be in debt for life.

“What the settlement will mean to me is that I can finally get my credit back,” she said.

Borrowers whose loans are canceled will receive a notice from Navient along with reimbursement of any payments made after mid-2021.

The settlement also includes Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska. , Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, Washington, West Virginia and Wisconsin.


AP writer Gene Johnson contributed from Seattle.

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

Student Loans Manager Navient Settles $ 1.85 Billion Deceptive and Abusive Practices Claims, Responds Attorney General Josh Shapiro

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