Tue. Jan 18th, 2022

Navient, one of the largest private student loan providers in the US, has reached a $ 1.85 billion settlement with dozens of states accusing the company of “fraudulently” capturing thousands of borrowers with expensive repayment plans.

The settlement hits one of the most well-known providers of student loans in the US, which has accused authorities of predatory behavior as the investigation escalates into an uncertain accelerated accumulation of student debt.

Under the agreement with 39 U.S. states, $ 1.7 billion in private student loan debt owed by nearly 66,000 clients will be canceled, and Navient will pay $ 95m in restitution to students across the country.

“For too long, Navient has contributed to the national student debt crisis by fraudulently trapping thousands of students in more debt,” Letitia James, New York’s attorney general, said in a statement. “Navient will no longer be able to fill its pockets at the expense of students trying to obtain a university degree.”

The state’s investigation found that from 2009, Navient has been driving students struggling to repay their loans to costly, long-term delays rather than advising them on other repayment schemes, which have contributed to customers’ debt stacks, according to the New York Attorney General’s Office.

Authorities said the company also provided “robbery, subprime, private loans” to students attending for-profit schools and lower-quality institutions, knowing that many of those lenders would not be able to repay their loans.

“The company’s decision to resolve these issues, which was based on unfounded claims, enables us to avoid the additional burden, expense, time and distraction of triumphing in court,” said Mark Heleen, Navient’s Chief Justice. . The lender helped lenders “choose the right payment options to meet their needs,” he said. Navient denied any wrongdoing.

Read more Navient’s settlement here.

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