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Thirty-nine state attorneys general announced a settlement with Navient over the servicing of student loans.
“For too long, Navient contributed to the national student debt crisis by deceptively trapping thousands of students into more debt,” said Attorney General Letitia James of New York State. “Today’s billion-dollar agreement will bring relief to thousands of borrowers in New York and across the nation and help them get back on their feet. Navient will no longer be able to line its pockets at the expense of students who are trying to earn a college degree. Student loan servicers that operate through deception and wrongdoing will not be tolerated and will be held accountable by my office.”
The investigation found, according to James, that Navient also provided predatory, subprime, private loans to students attending for-profit schools and colleges with low graduation rates, although the company knew that a very high percentage of those borrowers would be unable to repay the loans. Navient allegedly made these risky subprime loans as an inducement to get schools to use Navient as a preferred lender for highly profitable federal and private loans, without regard for borrowers and their families, many of whom it unknowingly ensnared in debts they could never repay.
Navient will cancel the remaining balance on nearly $1.7 billion in subprime, private student loan balances owed by nearly 66,000 borrowers nationwide.
The company denied doing anything illegal. “The company’s decision to resolve these matters, which were based on unfounded claims, allows us to avoid the additional burden, expense, time and distraction to prevail in court,” said Mark Heleen, Navient’s chief legal officer.
