The $1.85 billion settlement with 39 state attorneys general was announced Thursday.
Navient “engages in fraudulent and abusive practices, targeting students it knows will struggle to pay back loans and placing an unfair burden on those trying to improve their lives.” their way through education,” Pennsylvania Attorney General Josh Shapiro, who helped lead the negotiations, said in a statement.
Among other things, he said, Navient misled borrowers who were having trouble making payments into what is known as long-term debt, which left them even more in debt. .
Prohibition is when a lender allows a borrower to pause or reduce payments for a limited time while they rebuild their finances. However, interest on the loan continues to accrue and can eventually cause the amount to be paid over the life of the loan higher.
Navient denies acting illegally and does not admit any wrongdoing under the settlement, which is subject to court approval.
“Navient has been and continues to be focused on helping student borrowers understand and choose the payment options that are right for their needs,” Chief Legal Officer Mark Heleen said in a statement.
In addition to forgiving tens of thousands of loans, Navient will pay $142.5 million, most of which will go to about 350,000 borrowers who have been hit with long-term loans.
In addition, Navient will have to do more to advise borrowers about their options and explain repayment plans to them.
Massachusetts Attorney General Maura Healey called the deal “an important step toward addressing our broken student loan repayment system.”
Among those who will benefit is Ashley Hardin, 38, of Seattle. Hardin defaulted on about $108,000 in private student loans in 2020 after more than a decade of trying to repay a loan she attended at the Brooks Institute of Photography in California.
Her monthly payments are usually more than the rent. For a time, Navient agreed to reduce her payments to about $650 per month, but when that period ended, she was more than $1,000 in debt and had to pay compound interest.
“It’s a big weight that’s been lifted,” said Hardin, who couldn’t pursue 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 tomorrow I’m not going to get the call that they’re going to sue me for defaulting.”
Helena Moon, 34, was accepted into her “dream university” – Howard University – when she was 18. When financial aid and scholarships weren’t enough, she turned to private loans and found herself surrounded by phone calls and letters from lenders after graduation. . Moon, who lives in Washington DC, said the experience was also stressful for her mother, a co-signer on the loans.
“This is a step forward in racial equality when you think about the proportion of African-Americans in debt in this country,” she said of the agreement.
Kelly Feeherry, 34, of Franklin, Massachusetts, describes the experience of using borrowed money to attend an art school as a “living nightmare” that threatened to cost her a lifetime of debt.
“What the settlement will mean to me is that I can finally get my credit back,” she said.
Borrowers whose loans have been canceled will receive a notification from Navient along with a refund of any payments made after mid-2021.
Settlements also include 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 of the Associated Press. Copyright Registered.
https://abc13.com/student-loan-debt-cancel-navient-pennsylvania-attorney-general-josh-shapiro-loans/11467175/ Student loan provider Navient settles claims of ‘fraud and abuse’ for $1.85 billion, Attorney General Josh Shapiro reacts