2022 brought great relief to the students who were struggling to repay their Navient student loans. The Navient Student Loan Forgiveness program helps all those students who unknowingly threw themselves into the ocean of debts that they could never repay. In this article, we are going to discuss the Navient Student Loans Lawsuit and the historic Navient settlement
Navient was known to all Americans as the country’s largest federal and private student loan provider. However, the federal contract ended after December 2021. Despite helping the students borrow money in difficult times, Navient earned a negative reputation for many of its activities which were adding pressure on the students due to the accumulated debts.
Navient Student Loans Lawsuit was filed by the CFPB (Consumer Financial Protection Bureau) in 2017. Although it is separate from the Navient Settlement with 39 states, their points of argument are the same.
Arizona, Arkansas, California, Colorado, Connecticut, the District of Columbia, Delaware, Florida, Georgia, Hawaii, Indiana, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia, Vermont, Washington, and Wisconsin.
The lawsuit revealed Navient’s strategy for collecting the loan repayments and the CFPB argued how the students become victims of forbearance due to the absence of income-driven repayment plans. It was also mentioned that forbearance encouraged to increase in the overall debt as the lender kept on adding interest to the principal amount.
There was also a special focus on how the situation could have been different had there been an income-driven repayment plan. This would have ensured continuous payment from the students and could also help them to be qualified for the forgiveness of the remaining balance. But, that is not the case if payments are skipped in forbearance. Besides, the income-driven plan could have helped by not adding the interest accrued to the principal amount.
As per the Navient settlement, Navient was asked to do the followings:
In January 2022, an announcement made by Pennsylvania Attorney General Josh Shapiro showed that Navient agreed to forgive $1.7 billion in subprime private student debt owed by 66,000 student loan borrowers. This was primarily taken for for-profit schools such as ITT Technical Institute and the Art Institute. In addition to that, Navient consented to make $95 million in compensation installments of about $260 each to roughly 350,000 government advance borrowers who were set in specific types of long-term student loan forbearance.
The Navient Settlement totals $1.85 billion, out of which $1.7 billion has been considered for student loan forgiveness. Here are the few things you need to know about the Navient Student Loan Forgiveness:
All we can say is that the Naivent settlement was justice to all those distressed borrowers who were waiting for some miracles for a long time. However, federal student loan borrowers were disappointed since much not had been done in their favor. All in all, Navient Student Loans Lawsuit was surely a right step towards the prevention of deceptive loan servicing and who knows we may witness many more righteous actions in the future.