BATON ROUGE, La. (KLFY) – One of the nations largest student loan servicers, Navient, will be canceling nearly $23.7 million in debt to Louisiana borrowers to resolve allegations of unfair and deceptive student loan servicing practice.
As part of the settlement, Louisiana will receive a total of $3,600,563 in restitution payments for more than 13,000 federal loan borrowers. Additionally, 1,178 borrowers will receive a total of $23,736,065 in private loan debt cancellation.
Attorney General Jeff Landry and 38 other attorneys general joined together in the settlement to resolve claims that since 2009, Navient steered student loan borrowers into costly long-term forbearances instead of counseling them about the benefits of more affordable income-driven repayment plans. Navient’s claimed they would help borrowers find the best repayment options for them.
“Through unfair and deceptive practices, Navient drowned many of our neighbors in debt,” said Attorney General Landry. “I am proud to not only bring relief to Louisiana borrowers, but also establish protections to prevent Navient from preying on students in the future.” Landry filed the settlement as a proposed Consent Judgment and Complaint today in the 19th Judicial District Court and the settlement will require court approval.
According to the attorneys general, the interest that accrued because of Navient’s forbearance steering practices was added to the borrowers’ loan balances, pushing borrowers further in debt. Navient also allegedly gave out predatory subprime private loans to students attending for-profit schools and colleges with low graduation rates, even though it knew that a very high percentage of such borrowers would be unable to repay the loans.
Under the terms of the settlement, Navient will cancel the debt, nearly $1.7 billion in subprime private student loan balances owed by nearly 66,000 borrowers across the country. In addition, a total of $95 million in restitution payments of about $260 each will be distributed to approximately 350,000 federal loan borrowers who were placed in certain types of long-term forbearances. Federal loan borrowers who qualify for relief under this settlement do not need to take any action except update or create their studentaid.gov account to ensure that the U.S. Department of Education has their current address. For more information, visit www.NavientAGSettlement.com.