The recent settlement of the lawsuit brought by a range of stadents against Navient (formerly known as Sallie Mae and one of the nation’s largest student loan servicing companies) has direct relevance for student borrowers in Colorado.
Nationally, more than 400,000 student loan holders will have their debts canceled or receive debt relief after the student loan servicing company was forced to reached a settlement with borrowers.
Navient’s move to settle came in response to lawsuits lodged by a coalition of state attorneys general who accused the company of exploiting borrowers and forcing them into illegitimate charges and interest payments.
The coalition included attorneys general from Massachusetts, Pennsylvania, California, Florida and a range of other states who have been pursuing the student loans giant, previously known as Sallie Mae, over alleged predatory lending practices that have impacted on hundreds of thousands of borrowers.
The agreement, which will have to be approved by a judge before it is finalised, cancels $1.7 billion in private loan debt owed by more than 66,000 borrowers and provides $95 million in restitution payments to approximately 350,000 federal loan borrowers who were placed on specific types of long-term forebearance.
And a good many of these borrowers are located in Colorado.
1339 Colorado borrowers to receive more than $35m in loan relief
Colorado Attorney General Phil Weiser said in a statement that Navient, one of the nation’s largest student loan servicers, will provide debt relief to 1,339 Colorado student loan borrowers totaling more than $35 million, and pay $260 each in restitution to 6,844 Colorado borrowers after widespread unfair, deceptive, and predatory student loan servicing practices.
“Many of our young people, and those who wish to further their education later in life, are faced with daunting financial decisions that can have decades-long ramifications,” Weiser said. “Student loan servicers like Navient have an ethical and legal responsibility to inform borrowers of the best repayment options available to them, and to support them as they work to pay back their loans. When they fail to do so, they need to be held accountable. Today’s settlement will do just that and provide many students with the relief they deserve.”
The settlement, in addition to restitution and forgiveness requirements, requires Navient to cease its deceptive practices and notify borrowers about the U.S. Department of Education’s recently announced PSLF limited waiver opportunity, which temporarily offers millions of qualifying public service workers the chance to have previously nonqualifying repayment periods counted toward loan forgiveness. Colorado led the investigation into Navient’s misconduct concerning the PSLF program and championed the inclusion of these requirements in the settlement.
Students eligible for relief will receive a notice from Navient, along with refunds of any payments made on the canceled private loans after June 30, 2021. Federal loan borrowers who are eligible for a restitution payment will receive a postcard in the mail from the settlement administrator later this spring. Colorado student loan borrowers do not need to take other action, except to update or create their studentaid.gov account to ensure the U.S. Department of Education has their current address. For more information about the settlement, visit www.NavientAGSettlement.com.
Navient will also pay $650,000 to the state of Colorado to support future consumer protection efforts, including those targeted at supporting student borrowers and promoting financial literacy.
Am I eligible for debt cancellation in this Navient settlement?
The loans in question were taken out primarily between 2002 to 2014. These private loans often came with a variable, rather than fixed, interest rate and a shorter window than federal student loans to make payments before the loans were declared to be in default.
The attorney’s argued that many borrowers who were struggling to make payments were not told about a federal “income driven” program that could lower their payments. Others were not told about a federal program that forgives some debt for public-sector workers.
According to Navient, states with borrowers potentially eligible for relief include Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia, Vermont, Washington, West Virginia, Wisconsin.
“Qualifying federal loan borrowers who were residents of one of the following states or had an address with a military postal code as of January 2017 will be issued a check in the amount of approximately $260,” Navient said.
“The agreement includes loan cancelation for approximately 66,000 borrowers who took out private student loans at Sallie Mae, largely between 2002 and 2010 and who subsequently defaulted. The vast majority of recipients borrowed prior to 2010 to attend certain for-profit schools, such as Corinthian and ITT, which closed years later once the federal government stopped lending at these schools. The total amount that will be canceled is approximately $1.7 billion in defaulted private education loans. Navient had already charged off virtually all of these loan balances, and has taken a $50 million charge for the remaining amount. Once court approval is received, borrowers and co-borrowers whose loans will be canceled will be contacted by Navient. Borrowers and co-borrowers do not need to take any action.
Are there other lawsuits against Navient still going?
Yes, a whole range of lawsuits against are still active, including the suit lodged by the Consumer Financial Protection Bureau.
How do I find out if I qualify for debt cancellation or compensation?
Navient says it will be contacting borrowers who will receive loan cancellation following authorization of the settlement agreement in federal court. Borrowers eligible for a settlement payment will receive a postcard in the mail in the spring, according to Navient.
How to join the Navient student loan cancellation settlement
Once court approval is received, borrowers and co-borrowers whose loans will be canceled will be contacted by Navient. Borrowers and co-borrowers do not need to take any action.
How much could I get in the Navient settlement?
According to AP, in Massachusetts and Pennsylvania the average debt being canceled is around $27,000. In Washington state, it’s about $25,000.
When will Navient cancel my debts or provide compensation?
Borrowers who will 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, according to state officials. Private loan borrowers don’t need to take any action to qualify, AP has reported.
Borrowers who are eligible for a restitution payment of approximately $260 will receive a postcard from the settlement administrator this spring, state officials say. Checks are expected to go out in mid-2022.
What is the full list of 39 states that Navient has settled with?
The settlement was led by Pennsylvania, Washington, Illinois, Massachusetts and California, and was joined by attorneys general in Arizona, Arkansas, Colorado, Connecticut, the District of Columbia, Delaware, Florida, Georgia, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia, Vermont and Wisconsin. All up, that’s 39 states.