Attorney General Dana Nessel announced Thursday that more than 1,500 student borrowers in the Great Lakes State will benefit from a settlement between student loan servicer Navient and nearly 40 states, including Michigan.
Delaware-based Navient is one of the country’s largest companies that service and collect student loans. It faced litigation brought by several state attorneys general over claims that it engaged in unfair and predatory practices while lending to students.
Navient has denied violating any laws, but settled Thursday for $1.85 billion and an agreement to change its business practices.
“The predatory practices used by Navient exploited students who wanted nothing more than an education,” Nessel said in a statement. “The company placed borrowers in risky subprime loans, causing them to incur debts they could never repay. This settlement reflects accountability for affected borrowers across the country.”
Nessel’s office noted that it is still reviewing the full scope of relief the settlement will have on Michigan borrowers, and will provide an update once that is determined.
Michigan joins 37 other states and the District of Columbia in benefiting from the settlement. The litigation was co-led by the attorneys general from Pennsylvania, Washington, Illinois, Massachusetts and California.
The settlement is set to provide more than 400,000 student loan borrowers with some debt relief. About 350,000 federal student loan borrowers who had been placed in long-term forbearance by Navient will receive about $260 each for a total restitution of $95 million.
The company had allegedly been steering borrowers into forbearance, which led some to fall deeper into debt, rather than guiding them toward low-cost repayment programs. Other allegations include claims that Navient made private loans to students with low graduation rates despite knowing that many would be unable to repay.
The settlement will also require Navient to cancel the remaining balance on $1.7 billion in subprime private student loan balances owed by more than 66,000 borrowers across the country, including 1,576 in Michigan.
Business practice reforms, including training specialists to properly advise distressed borrowers, are also required by the company.
Borrowers who qualify will automatically receive notification from Navient later this year.Originally published January 18, 2022 on Michigan Advance. It is shared here with permission.
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