TAMPA, Fla. (WFLA) – Student loan processor Navient, which will soon drop its handling of federal loans to Maximus, will have to cancel $1.7 billion in student loans and pay states whose attorneys general sued them for an amount collective of $145 million.
The big question for borrowers: will their student loans be forgiven?
Navient has reached a settlement agreement with 39 states to forgive student loan debt for students with private loans after being accused of predatory lending practices and giving loans to students who wouldn’t be able to repay them.
Following the settlement, Navient issued a brief statement regarding the claims that led to the lawsuits, announcing that they would cancel loan balances for thousands of borrowers. Despite the settlement, the company maintains that the claims were unfounded and that the settlement is intended to avoid additional expense of time and money in legal actions.
“Navient will write off the loan balances of approximately 66,000 borrowers with certain eligible private education loans that were issued largely between 2002 and 2010 and then defaulted and were written off,” a statement said in part. press release from Navient. “Navient will notify affected borrowers and co-borrowers shortly after the agreements have received final court approval.”
In addition, Navient will pay a one-time payment of $145 million to the 39 states that have sued, with a portion used to reimburse states’ legal costs and the remainder to be paid out as payments to former borrowers.
There have been six lawsuits against Navient, with 39 states signed. The loans, being private, are different from the more familiar student loans received through the US government-run system, the Free Application for Federal Student Aid. Unlike FAFSA loans, Navient private loans were not backed by the federal government.
So who is eligible for student loan forgiveness?
Students likely to benefit from this settlement had to take out loans to attend for-profit colleges such as the ITT Technical Institute (permanently closed in 2016 after declaring bankruptcy) and the Art Institute (some campuses are still in operation). activity).
According to Navient, states whose borrowers are potentially eligible for relief include Arizona, California, Colorado, Connecticut, District of Columbia, Delaware, Florida, Georgia, Hawaii, Iowa, Illinois, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Maine, and Minnesota. , Missouri, North Carolina, Nebraska, New Jersey, New Mexico, New York, Nevada, Ohio, Oregon, Pennsylvania, Tennessee, Virginia, Washington and Wisconsin.
“Eligible federal borrowers who resided in one of the following states or had an address with a military zip code as of January 2017 will receive a check for approximately $260,” Navient said. Separately, the company told WFLA that Florida has more than 7,000 borrowers who will be included in the 66,000 whose loans have been forgiven.
“In the loan forgiveness population of 66,000, Florida has about 7,600 borrowers,” a Navient spokesperson told WFLA. “These are borrowers who took out private student loans at Sallie Mae, largely between 2002 and 2010 and then defaulted.”
The settlement agreement comes shortly before Navient leaves the federal student loan servicing business, with the loans it currently serves set to transfer to Maximus, another loan servicer.
Navient will contact borrowers who receive loan forgiveness after the Federal Court clears the settlement agreement. Borrowers eligible for a settlement payment will receive a postcard in the mail in the spring, according to Navient.